By Zhang Qi

Research Report Vol.18 No.4, 2016

I. Great Significance of Developing Cooperation Mechanisms for the Belt and Road Initiative

After the 2008 financial crisis, under the pressure of economic transition and restructuring, many countries have gloomy expectation of economic growth and low market confidence, and the world economy is expected to continue to grow at a low rate. There is a grim situation of global international trade and cross-border investment. In this context, as multilateral negotiations progress slowly, regional cooperation has become an important way and trend for economies to participate in international competition and cooperation. Specifically, Regional Trade Agreements and Free Trade Areas (RTA/FTA) continue to accelerate the growth; regional and sub-regional cooperation in various fields and in diverse ways are sprouting; Mega-FTA in regional integration are more frequently seen, and Europe and the United States focus on opening up investment and service markets in the process of liberalization. Rules of the new round of global trade and investment are restructured, showing a trend of higher level, higher standards and more liberalization, which brings unprecedented pressure to China in its market opening-up and reform of economic management system. Due to increasingly emerging global issues and global risks, countries are more willing to deepen cooperation and strengthen global governance. Amid concerns, they also expect China to shoulder more responsibilities as it has growing influence on international economic and trade regime. The Belt and Road Initiative is a public good provided by China to the world, with the core goal of sharing development opportunities, and promoting regional and global economic prosperity by deepening trade, investment and cooperation with countries along the Belt and Road. Developing cooperation mechanisms for the Belt and Road Initiative greatly ensures the realization of the goal and serves as the key way to solve practical problems. Hence, it is of much practical significance. Pushing forward the Belt and Road cooperation mechanisms is of necessity as China is faced with new circumstances like international economic downturn, and especially greater regional economic cooperation. Besides, regional cooperation mechanisms help deepen trade, investment and cooperation with counties along the Belt and Road, build a new regional production network, and expand space for economic development so as to offer new opportunities to China’s economic transition and upgrading under the new normal as well as improving its position in the global value chain. Pushing forward the Belt and Road cooperation mechanism is of strategic necessity as China plans to build a new pattern of opening-up. As China is located on the key link of the Belt and Road, we should vigorously enhance the development of an open economy in the middle and western parts of China, which helps establish a new system of an open economy, especially a new phase of all-round two-way opening up with links running eastward and westward over land and sea, which is proposed in the fifth plenary session of the 18th CPC Central Committee. Pushing forward the Belt and Road cooperation mechanisms relieves pressure on China brought by the new rules of international economy and trade. It is important to build an inclusive and open platform for cooperation, especially cooperation in industry, R&D and innovation, investment and finance, infrastructural connectivity and improvement. It is conducive to enhancing regional development, regional economic and trade relations, and building consensus on regional cooperation in order to promote regional integration to a higher level and in a wider range in the future. Pushing forward the Belt and Road cooperation mechanisms is suitable for China as it is to shoulder more international responsibilities under the new situation, and the endeavor has become a key breakthrough for China to actively participate in global governance. First, it facilitates the building of an effective platform of regional communication and cooperation which rids bottlenecks for countries along the Belt and Road. Moreover, openness, inclusiveness and mutual benefit advocated by the Belt and Road Initiative will bring new ideas and cooperation patterns for building a more just and reasonable global governance system. In addition, as developed economies dominate international cooperation nowadays, the Belt and Road Initiative will be an experimental platform for developing countries to improve their international influence and governance, as well as a good trial by China to provide a global public good.

II. Difficulties of Developing Cooperation Mechanisms for the Belt and Road Initiative

There are 65 countries along the Belt and Road, making the initiative an unprecedented cross-regional one. At present, many practical difficulties and problems need to be solved in the process of building the Belt and Road cooperation mechanisms. First, the majority of the countries along the Belt and Road are economically underdeveloped, whose per capita GDP is only half of the global average. What’s more, differences in economic development among these countries will cause different stages and goals of development, holding up the process of regional cooperation. Second, compared with the European Union and NAFTA of North America, trade intensity index in the Belt and Road area has been dropping year by year since 2002 (see Figure 1), and countries in the area are severely dependent on the outside market. Besides, most countries along the Belt and Road, including China, are still in the middle or low end of the global value chain, hence vulnerable to economic fluctuations outside the area. It is also bothered by the intensified competition which causes decreasing profits. Third, some countries are either new members or accession-applicants of the WTO. They need to further open up to the outside world. So there are no typical free trade areas along the Belt and Road, and it is an uphill slog to build high-quality regional trade and investment arrangements. Fourth, some countries along the Belt and Road have poor infrastructure and little connectivity and convenience, a heavy discount on the scale and efficiency of cross-border trade and investment. Fifth, all kinds of cooperation mechanisms exist along the Belt and Road, with overlapping members and areas of cooperation but different vitality. Some mechanisms include China, some do not; some are within the Belt and Road area, some cover part of the area; some have close cooperation, some do not; so all these cooperation mechanisms are different, with various goals and interests. If we fail to explain how to realize mutual benefit of the Belt and Road Initiative, it is difficult to answer questions from the outside world and even deepen regional cooperation. ...

If you need the full text, please leave a message on the website.