“Belt and Road”: Construct China’s New Strategy for Economic Development

Chinese President Xi Jinping, during his visits to countries in Central and Southeast Asia in September and October 2013, proposed the important initiative of building a “Silk Road Economic Belt” and a “21st Century Maritime Silk Road” jointly with these countries. In March 2015, the National Development and Reform Commission, Ministry of Foreign Affairs and Ministry of Commerce of China jointly issued the Vision and Actions on Jointly Building Silk Road Economic Belt and 21st-Century Maritime Silk Road. By then, the “Belt and Road Initiative”, connecting with the Asia-Pacific economic circle in the east and the European economic circle in the west, and running through the Eurasia was officially formed and put into practice. 

Building up a new pattern of opening to the outside world 

For more than three decades of reform and opening up, China has implemented a series of strategies of opening to the outside world based on basic national conditions. These strategies were basically marked by “introduction”, to introduce the capital, technologies and management experience of foreign countries to China, and export products made with the low cost advantage of China to the international market at competitive prices. Pushed by the powerful overseas demand, the Chinese economy mounted onto one new stage after another, and China became the second largest economy in the world in 2010. 

After the outbreak of the financial crisis in 2008, all main economies in the world adopted various measures to cope with the crisis and restore economic prosperity, but no significant effect was produced. At this time, it is imperative to inject vigor and add new motive force to the global economy, to push it onto the road of revival as early as possible. In the meantime, under the economic new normal of economy, the domestic economy also faces significant pressure of downward pressure. It is highly necessary to make good use of overseas markets and combine the domestic market with the overseas one, to provide sustaining motive force for economic development. The “Belt and Road” initiative thus emerged at this right moment. It is marked by “going global”, to take initiative to link some advantages of China in capital, technologies, production capacity and economic development experience with the element resources endowment conditions in countries along the Belt and Road, for cooperation with mutual benefits. This will not only push forward the economic development in emerging economies and developing countries, but also promote the opening up to the outside world and economic development in the central and western regions of China, to form a new pattern of laying equal stress to “introduction” and “going global” and overall planning of both domestic and overseas markets in the new situation. 

Pushing forward economic transition and upgrading 

In the new normal of economy, the economic growth speed transits from the high-speed growth to the medium-high rate. This certainly agrees with the law of economic development, however, we must also pay attention to the problems of low quality and insufficient motive force of sustaining in the economic development of China. With the unbalanced supply and demand, it is imperative to energetically strengthen the supply-side structural reform while moderately expand total demand. 

The main contents in the supply-side structural reform at present are to “address overcapacity and reduce inventory, deleverage, lower costs, and bolster areas of weakness”, while the “Belt and Road Initiative” has provided an entry point to start these tasks. Most countries along the “Belt and Road” are emerging economies and developing countries, which are in the process of rapid industrialization and urbanization, with big demand for machinery and equipment and infrastructures. Therefore, it will fully enable us to give play to our advantages as a big manufacturing country, to drive up trade with investment, supply products with high performance to price ratio with excessive production facilities and via international cooperation on production capacity, to realize mutual benefit. 

In the meantime, to better realize international production capacity cooperation on production capacity and avoid exporting outdated production facilities as surplus capacity, we must also raise the product quality and technical level and reduce production cost with scientific and technological innovation, to make the international production capacity cooperation more sustainable. Furthermore, the “Belt and Road” also link with some developed countries. We should, through the cooperation in the emerging industrial fields of new generation of information technology, biology, new energy and materials, actively absorb advanced technologies from developed countries, strengthen our weaknesses of depending on developed countries in core technologies, important equipment and critical components, and promote the scientific and technological innovation in China. In this way, with the “Belt and Road” boosting the supply-side structural reform, it can create favorable development opportunities and bigger spaces of development for the economic transition and upgrading in China. 

Providing China program for global economic governance 

With the increase of economic strength of emerging economies, their position and roles in global economic governance system are rising, and their right of speech and influence increasing; and the previous global economic governance system dominated by developed countries can hardly adapt to the gradually changing pattern of world economy today. The global economic governance system needs reform and adjustment, and the “Belt and Road Initiative” proposed by China has just met this demand. 

In the cooperation concept, the “Belt and Road Initiative” adheres to the principle of achieving shared growth through discussion and collaboration, to actively promote the mutual connection of development strategies in countries along the “Belt and Road”, and jointly build up an open, inclusive and balanced regional economic cooperation architecture that benefits all; in the main areas of cooperation, it stresses policy communication, facilities connectivity, unimpeded trade, financial integration and people-to-people bonds, to strengthen the economic complement, tap cooperation potential and expand space of cooperation based on different resource endowments in countries along the “Belt and Road”; in cooperation mechanism, the existing bilateral and multilateral cooperation mechanisms will be actively used, as supplement and consolidation of the existing cooperation mechanism and platforms, for example, the AIIB and Silk Road Fund set up with initiative of China are beneficial supplement to the current international financial system. 

In this sense, the “Belt and Road Initiative” takes the road of opening-up and cooperation for mutual benefit and win-win outcomes. It takes into account the interests and concerns of all parties, to seek for the conjunction point of interests and common denominator of cooperation, link the “Chinese Dream” with the “dreams of all peoples”, and consolidate the “community of interests” and “community with common future”. China will not only make its contribution to the balanced development of world economy, more important, it will provide the Chinese wisdom and Chinese motive force for the restructuring of the global economic governance system. 

(The author is a research fellow of the National Academy of Economic Strategy, CASS)