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The Belt and Road Initiative and Its Global Significance
Speech by Consul General Hong Lei at 2017 Silk Road Conference in Chicago
2017/05/01

The Belt and Road Initiative and Its Global Significance

 

 

Distinguished Professor Harry Lepinske,

Honorable ambassadors, consul generals,

Ladies and gentlemen:

 

It is my great pleasure to take this opportunity to share with you some thoughts on the Silk Road Economic Belt and the 21st Century Maritime Silk Road proposed by Chinese leadership.

The Silk Road Economic Belt and the 21st Century Maritime Silk Road, or the Belt and Road Initiative as we call it today, were proposed separately by President Xi Jinping during his visits to  Kazakhstan and Indonesia in September and October, 2013. This is a great conception put forward by China to deepen its reform and opening-up and move forward neighborhood diplomacy in the new age. It has not only drawn world-wide attention, but also received positive response and warm participation from neighboring countries. As a crucial approach to push forward the Belt and Road, China also proposed the building of the Asia Infrastructure Investment Bank (AIIB), Silk Road Fund and China-ASEAN Maritime Cooperation Fund. My presentation will cover four parts, namely the background of the Belt and Road initiative, process of implementation, connotation & features of the initiative, and the upcoming Belt and Road Forum for International Cooperation in May. I hope that you can get a better understanding of this great proposal from my speech.

I. Background

As early as 2100 years ago, diplomat and explorer Zhang Qian in the Chinese Han Dynasty went on two expeditions to the Western Regions, today's Central Asia and South Asia, to pass on peace and friendship to and open the door of engagement with various countries in this region. This commercial route has been refreshing itself throughout history and gradually extended to the "Silk Road" stretching tens of thousands miles long across Europe and Asia. In the mid and late Tang Dynasty, China's economic center moved to the south, and the maritime road replaced the land to become the main channel of foreign trade. The Maritime Silk Road reached its peak in the Song and Yuan Dynasties with the technology breakthroughs in navigation and the booming economy and trade.

For thousands of years, the land and maritime silk roads have brought silk, porcelain, pepper, spices to countries along the routes, as well as peace and friendship. The silk roads enable countries along the roads to communicate and learn from each other in terms of commodities, technologies, personnel and ideas, promote economic, cultural and social development of relevant countries, facilitate harmonious co-existence and common development of various races, religions and cultures, and create tangible benefits to people in countries along the route. The most precious spiritual heritage that silk road has left with us is the idea of peaceful cooperation, openness and inclusiveness, mutual learning and win-win results.

Complex and profound changes are taking place in the world. The underlying impact of the international financial crisis keeps emerging; the world economy is recovering slowly, and global development is uneven; the international trade and investment landscape and rules for multilateral trade and investment are undergoing major adjustments; and countries still face big challenges to their development. The initiative to jointly build the Belt and Road, embracing the trend towards a multipolar world, economic globalization, cultural diversity and greater IT application, is designed to uphold the global free trade regime and the open world economy in the spirit of open regional cooperation. It is aimed at promoting orderly and free flow of economic factors, highly efficient allocation of resources and deep integration of markets; encouraging the countries along the Belt and Road to achieve economic policy coordination and carry out broader and more in-depth regional cooperation of higher standards; and jointly creating an open, inclusive and balanced regional economic cooperation architecture that benefits all. Jointly building the Belt and Road is in the interests of the world community. Reflecting the common ideals and pursuit of human societies, it is a positive endeavor to seek new models of international cooperation and global governance, and will inject new positive energy into world peace and development.

The Belt and Road Initiative aims to promote the connectivity of Asian, European and African continents and their adjacent seas, establish and strengthen partnerships among the countries along the Belt and Road, set up all-dimensional, multi-tiered and composite connectivity networks, and realize diversified, independent, balanced and sustainable development in these countries. The connectivity projects of the Initiative will help align and coordinate the development strategies of the countries along the Belt and Road, tap market potential in this region, promote investment and consumption, create demands and job opportunities, enhance people-to-people and cultural exchanges, and mutual learning among the peoples of the relevant countries, and enable them to understand, trust and respect each other and live in harmony, peace and prosperity.

China's economy is closely connected with the world economy. China will stay committed to the basic policy of opening-up, build a new pattern of all-round opening-up, and integrate itself deeper into the world economic system. The Initiative will enable China to further expand and deepen its opening-up, and to strengthen its mutually beneficial cooperation with countries in Asia, Europe and Africa and the rest of the world. China is committed to shouldering more responsibilities and obligations within its capabilities, and making greater contributions to the peace and development of mankind.

II. Progress of "Belt and Road" Implementation

From the geographical point of view, the "Belt and Road" area is the most dynamic and potential economic cooperation corridor in the world. Along the corridor, there are more than 60 countries and regions, with a total population of about 4.4 billion and total economic output of about 21 trillion US dollars, accounting for about 63% and 29% of the world total respectively. In fact, the Belt and Road area is the largest and most extensive coverage of the emerging economic zone in the world. Running through the Asia-Europe-Africa continent, one end is the active East Asian economic circle, the other is the developed European economic circle, the middle is a hinterland with huge development potential. There are three key cooperation directions regarding Silk Road Economic Belt, namely from China to Europe (the Baltic Sea) by Central Asia, Russia; from China to the Persian Gulf and Mediterranean Sea by Central Asia and West Asia; from China to Southeast Asia, South Asia and Indian Ocean. There are two key cooperation directions regarding 21st Century Maritime Silk Road, one stretching from the Chinese coastal ports across the South China Sea to the Indian Ocean and extending to Europe; the other from China's coastal ports through the South China Sea to the South Pacific.

Belt and Road has been developed from scratch since the initiative was put forward in 2013, and has now widely extended and achieved fruitful results at a speed beyond expectations.

In terms of the participating countries, Belt and Road circle of friends continues to expand. More than 100 countries and international organizations have participated in the initiative, and more than 40 countries and international organizations have signed cooperation agreements with China, forming a wide range of consensus on international cooperation . The relevant resolutions or documents of the United Nations General Assembly and Security Council, the United Nations Economic and Social Commission for Asia and the Pacific, APEC, ASEM and the Greater Mekong Sub-regional Cooperation have incorporated or embodied elements of "Belt and Road". AIIB and Silk Road Fund provide a solid support for financial cooperation. Economies of China and Belt and Road countries have been deeply integrated. Upgraded FTA negotiations between China and ASEAN have been completed . FTA negotiations with some other countries have been completed or actively promoted.

In terms of the trade data, in January 2017, China's trade with major Belt and Road countries such as India, Russia and Saudi Arabia increased by 23.6%, 44% and 46.9% respectively, making it a major highlight of global trade. In contrast, China's exports to major trade partners such as the European Union, the United States, and ASEAN increased by less than 2% in the first three quarters of last year. However, its export to countries along the Belt and Road maintained a double-digit growth. At present, trade volume between China and countries along the Belt and Road accounts for more than 25% of China's total foreign trade. In 2016, trade volume between China and Belt and Road countries reached 6.2517 trillion yuan, up by 0.5% compared with the previous year. The turnover of the completed contracted construction business was $76 billion US dollars, up by 9.7%, accounting for 47.7% of the total turnover of China's foreign contracted projects in the same period.

In terms of the investment data, in 2016, China invested 14.53 billion US dollars in 53 fellow Belt and Road countries, accounting for 8.5% of China's total foreign investment in the same period. Chinese enterprises signed new contracts with the value of 126.03 billion US dollars with 61 relevant countries, accounting for 51.6% of foreign contracted projects China signed in the same period. The completed turnover reached 75.97 billion US dollars, accounting for 47.7% of the total.

In terms of the cooperation project, a number of major landmark projects have been put into operation or construction. At present, China has established 56 economic and trade cooperation zones in 23 countries, with more than 1,200 Chinese enterprises investing more than 18.5 billion US dollars, creating output of more than 20 billion US dollars annually, nearly 1.1 billion tax revenue and 250,000 local jobs. Through consultation, China and Belt and Road countries jointly promote the construction of a number of landmark cooperation projects, such as Indonesia's Jakarta-Bandung high-speed rail, Belgrade-Budapest railway, China-Laos railway, as well as a number of ports and other facilities. With the rapid development of interconnection, infrastructure construction such as China-Pakistan and China-Russia-Mongolia economic corridors and other fields have obtained a number of early harvest.

In terms of GDP growth, according to PwC statistics, due to the implementation of new infrastructure projects, the GDP growth rate of Belt and Road countries and regions was 4.6% in 2016, exceeding the average growth rate of 3.6% in developing economies.

III. Connotation & Features of the Belt and Road Initiative

The Belt and Road Initiative started from scratch and has drawn active participation and responses. Why is it so attractive?

First, the Belt and Road Initiative is an open and global public product. It aims to build a community of shared interests, responsibilities and future featuring mutual political trust, integrated economy and inclusive culture. The Belt and Road Initiative is not a "solo" by China alone but a "chorus" by all parties. It maximizes cooperation opportunities for countries along the road, deepens shared interests, benefits a large population and brings harmonious and prosperous life to all the peoples in the region. The Belt and Road Initiative promotes infrastructure connectivity, establishes Asian Infrastructure Investment Bank and Silk Road Fund and advocates alignment of strategies, providing material, institutional and spiritual public products to the world. Infrastructure connectivity, in particular, reflects the Belt and Road Initiative's nature as a public product and its focus on people's livelihood and development. For developed countries, investment in infrastructure will boost export and create space for structural reform. For developing countries, investment in infrastructure will bring jobs and lay a solid foundation for long-term economic development. Therefore, the Belt and Road Initiative injects stronger driving force into globalization and is widely welcomed.

Second, the Belt and Road Initiative demonstrates a new concept of mutually beneficial and win-win international relationship. Its core principles include wide consultation, joint construction and shared benefits, which means each and every party will have a say about its participation and relevant interests will be properly handled. All regional countries, big or small, rich or poor, can offer advice and suggestions and have influence over the multilateral cooperation agenda as equal participants of the Belt and Road Initiative. With bilateral and multilateral communication and consultations, countries will find economic complementarity, align their strategies and strengthen the capability of self-development by getting funds and technology and cultivating talents.

Third, the Belt and Road Initiative focuses on practical cooperation in five areas, namely policy communication, infrastructure connectivity, trade promotion, financial support and people-to-people exchanges. The Belt and Road Initiative aims not to replace current regional cooperation mechanisms and initiatives but to expand cooperation based on established framework and each country's comparative advantages and development needs. Among the five areas, policy communication serves as an important guarantee for strategic alignment and practical cooperation; infrastructure connectivity is the priority that features the construction of safe and efficient international passageway and economic corridor; trade promotion is the key to optimize the structure and facilitate the process of trade and investment so as to tap into the potential of economic cooperation; financial support serves the construction of Asian currency and financial systems and expands bilateral currency exchanges and settlement among regional countries; people-to-people exchanges lay the foundation of bilateral and multilateral cooperation by promoting rich and colorful cultural and people-to-people programs.

The Belt and Road Initiative inherits and carries forward the Silk Road spirit with oriental wisdom such as "harmony with differences" and "inclusiveness". Therefore, it demonstrates extensive inclusiveness and strong vitality and brings huge development opportunities to the world.

First, the opportunities for free trade and custom facilitation. The Belt and Road Initiative takes free trade zone cooperation as a priority and is committed to lowering trade and investment barriers and building a high-standard free trade network in the region step by step. Currently, 30% of China's foreign trade is completed through a free trade zone and a large part of it is with countries in the Belt and Road region. China is holding dialogues with these countries on an upgraded version of China-ASEAN Free Trade Area, China-Japan-South Korea Free Trade Zone, China-GCC Free Trade Zone and Regional Comprehensive Economic Partnership. China is also pushing forward custom cooperation among regional countries on border check facilities and visa facilitation. China has reached visa exempt agreements with 46 Belt and Road countries and 19 countries and regions have provided Chinese citizens with visas upon arrival.

Second, the opportunities for international production capacity cooperation. Production capacity cooperation is a major area of the Belt and Road Initiative. Professor Lin Yifu of Peking University found in his research that Ethiopian shoe-making workers get only one eighth to one tenth of Chinese workers' salary but the former's production rate is about 70% of the latter, reflecting a relatively big comparative advantage of Ethiopian workers. With this information, former Prime Minister Meles of Ethiopia paid a visit to Shenzhen and invited Chinese shoe-making companies to build plants in the oriental industrial park near Addis Ababa. Last year, women's shoes made by China's Huajian Group accounted for over 50% of Ethiopia's shoe export and drove the growth of industries such as fur processing, transportation, logistics and farming, turning "Made in China" into "Made in Africa".

China and Kazakhstan signed a MOU of production capacity and investment cooperation as well as 28 bilateral business agreements with the total value of 23.6 billion dollars, covering industries such as iron and steel, nonferrous metals, plate glass, oil refining, hydropower and automobile. Recently, Russia, Indonesia, Egypt, Pakistan, Algerian leaders have expressed their willingness to actively cooperate with China to carry out production capacity cooperation. Indonesia's 2015-2019 medium-term economic development plan shows that Indonesia annually produces only 7 million tons of steel, 60 million tons of cement and 250,000 tons of electrolytic aluminum. Indonesia's shipbuilding capacity is only 800,000 dead weight tons and the development of its glass, petrochemical, photovoltaic and communications equipment as well as railway equipment industries is lagging behind, presenting mutual advantages, mutual needs and mutual opportunities in its production capacity cooperation with China.

Chinese local governments and enterprises have also taken actions. Hebei Province plans to transfer the production capacity of 20 million tons of steel, 30 million tons of cement and 10 million tons of weight box of glass abroad by 2023. Zhejiang Jushi Group, China's leading enterprise in the glass fiber industry officially put "Jushi Egypt" project into operation last year. The first phase investment is US$ 223 million and the designed glass fiber production capacity is 80,000 tons. The annual output will reach 200,000 tons once the project is complete. Now both production and sales are booming and the benefits are outstanding .

Third, opportunities for macroeconomic growth. Faced with weak growth and lack of demand, all countries are looking for new economic growth point. The Belt and Road Initiative can inject new impetus into the world economy from two perspectives: on one hand, it can provide a "hard pull" of regional countries' economy by increasing supply and employment and promoting free flow of economic elements within the region through concrete economic projects. On the other hand, it can promote Asian and African countries to find a common direction and make joint efforts under a cohesive and attractive goal, which will boost market confidence and expectations. As a priority of the Belt and Road Initiative, infrastructure construction has substantial economic and social benefits. The six major economic corridors and important sea ports in the Belt and Road Initiative all take transportation projects as an important part. The related business opportunities are self-evident.

IV. Belt and Road Forum for International Cooperation

President Xi Jinping announced that the Belt and Road Forum for International Cooperation will be held in Beijing in May during his attendance at the World Economic Forum in Davos on January 17.

This forum will be the highest-level forum under the Initiative since its launching over three years ago, bearing great significance to pushing for international and regional cooperation. China has set "Belt and Road: Cooperation for Common Prosperity" as the Forum's theme. The agenda will focus on connectivity of policy, transportation, trade, finance and people. Discussions will be conducted on key topics such as infrastructure connectivity, economic cooperation and trade, industrial investment, energy and resources, financial support, people-to-people exchanges, ecological and environmental protection and marine cooperation. The Leaders Roundtable, the highlight of the Forum, will focus on two topics: Policy Synergy for Closer Partnership and Connectivity Cooperation for Interconnected Development.

We hope to achieve the following objectives at the Forum: first, thoroughly review the progress of the Initiative, showcase important early harvest outcomes, further build consensus for cooperation and sustain the momentum of cooperation; second, discuss major cooperation measures going forward, facilitate greater synergy of development strategies, deepen partnership and work for interconnected development; third, while promoting China's economic and social development and structural adjustment, work to advance international cooperation for win-win outcomes.

We hope that the Forum will deliver important outcomes in three aspects:

Firstly, pool more consensus. Documents will be issued on leaders' roundtable summit to further identify goals and principles for cooperation, and deepen the implementation of forging synergy of strategies. In the meantime, taking this forum as an opportunity, all parties will expand cooperation consensus, identify cooperation goals and specify cooperation measures. China has signed cooperation documents with over 40 countries and international organizations on jointing building the Belt and Road. It is expected that China will negotiate and sign cooperation documents with nearly 20 countries and over 20 international organizations and sign cooperation agreements with relevant countries and international organizations.

Secondly, identify cooperation directions. All parties will negotiate and determine important bilateral and multi-lateral cooperation fields for the next stage, draw up cooperation plans for the next 5 years or longer, and specify the detailed action plans. It is estimated that relevant Chinese departments will work with their counterparts of relevant countries to formulate nearly 20 action plans, covering infrastructure, energy, industrial capacity cooperation, trade and investment, etc. These action plans will translate visions into tangible moves, and turn grand blueprint into clear road map.

Thirdly, push forward the implementation of projects. Each side will further clear and align key cooperation projects, lay down project list of all fields, ensure the implementation of all projects, transform leaders' political consensus into execution for specific projects and translate the consensus into the practice of improving the basic necessities of life of common people and into the development focus of all countries.

Fourthly, improve supporting system. China will discuss with all sides to introduce a series of significant policies and measures including completing and strengthening financial cooperation mechanism, constructing comprehensive service platforms in science, technology, and environmental protection as well as other fields and enhancing exchange and training of professional talents of every domain. Relevant institutions of China are planning to introduce more supportive measures. Relevant parties will sign investment and financing agreements on multiple specific projects during the forum.

Up to now, 28 heads of state and government have confirmed their attendance at the forum at the invitation of President Xi Jinping. Officials, scholars, entrepreneurs, and people from financial institutions and media of 110 countries will also attend the forum, including 9 vice prime ministers, 7 foreign ministers and 190 ministerial-level officials from 92 countries. 89 heads and representatives from 61 international organizations will also attend the forum, making the total number of attendees more than 1200 from countries in Asia, Eurasia, Europe, North America, Latin America and Africa. It is well said that this forum will be another important international gathering and diplomatic event that China will host following APEC Summit in Beijing and G20 Summit in Hangzhou. It will surely harvest remarkable results.

The Belt and Road initiative features mutual respect, mutual trust, win-win cooperation and cultural sharing. As long countries along the Belt and Road work in unison, we will write a new chapter of the Belt and Road and enable people along the Belt and Road to have a share in its benefits.

Thank you!

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