Belt and Road Initiative and a New Phase of Economic Globalization

Zheng Bijian

May 14, 2017

The Belt and Road Forum for International Cooperation in Beijing is held at a most critical and opportune time when a strong anti-globalization wave in the form of trade protectionism and populism has swept parts of the developed world and the future and destiny of economic globalization is called into question. Here I would like to discuss with you three points on the topic of “Belt and Road Initiative and a New Phase of Economic Globalization”.

First, the problems of economic globalization do not portend that globalization is put to an end or in reverse gear. Rather, it means that the current round of economic globalization, after four decades of development, is ready for a major historical turning point, which sets the historical context for the emergence of the grand vision of Belt and Road Initiative to emerge.

The debate on economic globalization has been going on for quite some time, but the reason that it has received widespread attention recently is obviously linked to the debate over economic globalization vs. trade protectionism.

Over the 40 years since this round of economic globalization started in 1970s, we have enjoyed great economic achievements and, at the same time, witnessed a lot of problems piling up. That is the "dual nature" of economic globalization. The fact is that this round of globalization has both made tremendous contributions to world economic growth on the one hand and brought with it obvious flaws on the other. Fictitious economy has thrown the door wide and open for speculations; the hollowing out of domestic manufacturing industries has exacerbated unemployment; and increased social polarization has caused a sharp rise of populism. All these problems have now come to the fore in some developed countries, further affecting the rest of the world.

In such a situation, there are two alternatives before us. One is to resort to trade protectionism, and the other is to guide globalization into a new phase in the spirit of “community of common destiny for all mankind”, by a more balanced distribution of existing and innovative social productive forces, by rational combination of financial capital and real economy, by optimization of global governance and systemic reform of world economic and political order. The first alternative would lead the world backwards to where it was before economic globalization started, and therefore is clearly not an option. The second alternative represents the right choice to make, because it means we will rise up to globalization’s problems, address them properly and create a new prospect.

In a word, at this historical turning point, we must embrace a new phase of economic globalization with greater courage and more wisdom.

Second, the shift of world economic gravity made possible through a long period of economic development means that the developing world that is rising peacefully will embrace this new phase of economic globalization with new momentums, which provides the historical conditions for the grand vision of the “Belt and Road Initiative” to thrive.

In less than four years since the Belt and Road Initiative was proposed, it has received positive response and support from more than 100 countries and international organizations, which is a remarkable achievement. This is not difficult to understand given the new dynamics of world economy. This round of economic globalization has brought problems in developed economies to a head on the one hand and paved the way for developing economies to rise as a whole on the other. According to the latest projections of IMF, world economy is expected to grow at 3.6% from 2017 to 2018, higher than the 3.2% in the past two years, which is obviously good news. A closer look at the data shows that developing economies are expected to grow faster at 4.6%, more than double that of the developed economies at 2%. And if we put it in historical perspective, it is even more revealing. In terms of purchasing power parity, the size of developed economies as a whole versus that of the developing economies as a whole was 64:36 in 1980, 50:50 in 2007, but in 2018, this ratio is expected to reserve to 41:59.

So what does it mean exactly? Is it fair to say that in this long economic cycle of great changing dynamics, the shift of world economic gravity that started in 2010s will continue to gather new momentum for economic growth in the second, third and fourth decades of this century, driving rapid growth for developing economies and renewed growth for developed ones, thus leading to a new phase of economic globalization.

In short, the grand vision of the Belt and Road Initiative is a response to the historical requirements to bring economic globalization to a new phase by leveraging the changing dynamics and new momentums over a long period of time.

Third, the grand vision of the Belt and Road Initiative will go down in history as a symbol of economic globalization entering an unprecedented new phase from marine-based globalization to comprehensive globalization integrating the inland and marine economies.

Each previous round of economic globalization was marine–based, spreading from the Atlantic to the Pacific. This time it is different. Inland economy will, by implementing the Belt and Road Initiative, become a large component in economic globalization. The Belt and Road Initiative, by connecting container cargo transportation, expressways, high speed trains, air transportation, the internet, modern online financial products and other instruments old and new, is fully integrating marine economy and inland economy, which will bring about overall economic rise of the eastern, central and western regions of China, and economic cooperation and development across the Eurasian continent, further reaching Africa and the Americas. That is the most prominent new feature of the new phase of economic globalization.

When the Belt and Road Initiative was first proposed, it had met with skepticism, being regarded as China's way to transfer its excess production capacity, or China's Marshall Plan, or even being insinuated as neocolonialism or a contrivance to alienate western countries. All those stem from a narrow mindset of a zero-sum game. Those people don’t understand that the Belt and Road Initiative is, in essence, about cooperation, about developing converging interests and building communities of interests and community of common destiny. It is a strategic vision of “cooperative development” that echoes with economic globalization moving into a new stage.

Of course, we are fully aware that the Belt and Road Initiative, as a collaborative effort by many countries, is not an easy task that can be accomplished overnight. We need to make long term commitments. Therefore the countries involved must work together, and be prepared to work together for the long term.

My third point, in essence, is to illustrate that international cooperation under the Belt and Road Initiative has become a strong driver and important symbol of economic globalization entering a new phase of development.