‘HUGE opportunities” are available for trade, investments and people-to-people exchanges between the Philippines and China with the “New Silk Road” project of Chinese President Xi Jinping, according to a top Chinese economist.
Professor Zhang Yuyan, Director of the Institute of World Economic and Politics of the prestigious Chinese Academy of Social Sciences, said in a recent forum on “The Role of China in Global Economic Affairs” he is optimistic over the prospect of bilateral ties in the years ahead as his government speeds up implementation of its ambitious Silk Road Economic Belt and the Maritime Silk Road projects.
The twin initiative was first announced by Xi in 2013 and began to be implemented a year later, with primary focus on infrastructure development.
Internet research yielded the information that the Silk Road, or Silk Route, was an ancient network of trade routes that for centuries were central to cultural interaction through regions of the Asian continent connecting the West and East from China to the Mediterranean Sea.
The Silk Road derived its name from the lucrative trade in Chinese silk carried out along its length. Trade on the Silk Road played a significant role in the development of the civilizations of China, the Indian subcontinent, Persia (now Iran), Europe, the Horn of Africa and Arabia, ushering closer political and economic relations between the civilizations.
The Silk Road Economic Belt now aims to connect China with Central Asia, Russia and the Baltic countries in Europe; with the Persian Gulf and the Mediterranean Sea through Central Asia and West Asia; and with Southeast Asia, South Asia and the Indian Ocean.
The 21st-Century Maritime Silk Road, on the other hand, seeks to link China’s coast with Europe via two routes, one through the South China Sea and the Indian Ocean, the other from China’s coast through the South China Sea to the South Pacific. Zhang said China has made big inroads in strengthening economic ties with various countries covered by the Belt and Road (B&R) project.
Currently, more than 100 countries and international organizations are participating in the B&R, with 30 of them having signed agreements with China on jointly implementing the B&R strategy. More than 20 countries have worked with China in such areas as railway construction and nuclear-power generation.
Bilateral trade between China and countries situated along the B&R reached $995.5 billion in 2015. This figure represents 25 percent of the national total. China has also expanded the scope of 50 overseas economic cooperation areas.
Also last year, Chinese companies infused direct investments in 29 countries along the Belt and Road totaling $14.82 billion, or an increase of 18.2 percent over the previous year and accounting for 12.6 percent of the total.
Zhang said the Chinese economy is still booming as evidenced by its GDP growth rates, Consumer Price Index (CPI), employment rate, fiscal performance, money supply, interest rates, exchange rates, stock market, and trade and investment.
At the same time, he noted uncertainties in the economy, such as currency risks, the real-estate bubble, non-performing loans, public and corporate debts, and overcapacity.
Zhang pointed out that the “new normal” in China would be a shift from high growth to medium-high growth, depletion of rural surplus labor, and lesser dependence on employment in manufacturing as a share of total employment, as the economy would rely more and more on the service sector.
The Chinese economy is also approaching the technology frontier, which would require a shift from technology imports to homegrown innovation, he added.
To sustain China’s economic growth, Zhang said, Beijing should implement va r ious supply- side reforms.
Among these, he suggested, are to liberalize the labor market; improve the education system; build an innovation-driven economic system; strengthen a market-augmented government; reform state-owned enterprises (SOEs); cut excess production capacity; and reform the fiscal and taxation system.
The 21st-century Silk Road, the economist said, seeks to achieve five major goals: better policy coordination; enhanced facilities connectivity; unimpeded trade; financial integration and stronger people-to-people ties.
The project also has four dimensions. The physical dimension will strengthen connectivity among countries involved via overland roads, railways, sea routes, airways, the Internet and the like.
The financial dimension involves innovation and cooperation in transforming savings into investment in the economy and internationalization of the renminbi, the Chinese currency unit.
The institutional dimension seeks to reduce transaction costs and provide incentives for investors, while the cultural dimension will strive to achieve better understanding among various peoples and promote peaceful coexistence.
The economist explained that China has no “hidden agenda” in launching the New Silk Road project: “The export of production and construction capacity is not only in the interest of China, but also in the interest of those countries, whose financial resources and infrastructure are far from sufficient by pushing forward their industrialization, as well as helping to stabilize the world economy.”
Neither does it have a “sense of guilt,” Zhang said. On the contrary, he emphasized, President Xi wants to implement Belt and Road projects at a faster pace so that more countries would benefit and have “a sense of gain.”
I left the forum with a sense that what China wants at this point is to deemphasize the issues that divide the two countries, but rather to highlight what we can readily agree on, for our mutual benefit.
E-mail: ernhil@yahoo.com.