BEIJING — It was 2013 when Chinese President Xi Jinping first spoke about his vision of global trade as the “One Belt, One Road” plan. Merging the “Silk Road Economic Belt” and the “21st Century Maritime Silk Road,” Xi's is essentially a vision of international cooperation that spans across the fast-developing East Asia to the heart of the already well-developed European continent, passing through the vast hinterland composed of numerous developing countries in south and western Asia and eastern Europe.
This vast strategic plan involves more than 60 countries making up one-third of the world’s total economy and covering more than half of the global population. As such, certain people refer it as China’s “Marshall Plan.” Xi is driven in part by China’s realistic domestic needs in creating an entry point into the world's leading economies. But it is also an expression of Chinese aspirations to play a more active role in the readjustment and reconstruction of the global political and economic landscape.
After 30 years of reform and a gradual opening-up to the world, China has upgraded from a poor agricultural country to a manufacturing power. Thanks to the existing international economic order driven by the troika of "investment, exports and consumption," China has grown to be the world's second largest economy.
However, since the outbreak of the international financial crisis, the existing economic order in which China was so comfortably rising has been broken. Not only has the sluggish external demand become a burden for China's huge production capacity, but the pressure of overcapacity has also further limited domestic investment growth.
Workers in an electronics factory in Shenzhen — Photo: Steve Jurvetson
Almost all emerging economies share the same predicament. To sustain a continuously developing dynamic, China has to shift its strategy and find a new outlet for its appetite for growth. We should recall that the Marshall Plan carried out by the United States after World War II, and the Archipelago Transformation Plan introduced by Japan in the 1970s, were based on the same logic.
How China will break through in the face of a similar dilemma will not only affect its own development, but is also a test to see whether China can assume greater global responsibility as it rises. China's leaders have chosen to bank part of their future on responding to their neighbors' huge development needs. Compared with China's overcapacity and huge capital that urgently needs investment channels, its neighbors still have rapidly rising demand. According to data from the Asian Development Bank, there exists a capital gap of $8 trillion between 2011 to 2020 for Asia's infrastructure construction alone.
Beyond the factory
In order to work with its neighbors, China is trying to drive a new set of economic cycles outside the existing global status quo. Instead of "investing and producing at home and exporting to developed markets," it now seeks to redirect its domestic production capacity and capital as a way to help feed the developing Asian economies.This is no longer just about simple manufacturing and export productivity, but also about services, capital and the sharing of development experience.
Railway crossing from China to Kazakhstan — Photo: Yaohua2000
The China-Kazakhstan "productivity partnership" is an example of Beijing demonstrating that its relationships with neighboring countries are entering a new phase. Signed at the end of March, the partnership boasts 33 individual deals worth some $23 billion, which count a wide range of projects including steel, cement, and engineering machinery. China has also vowed to help Kazakhstan in establishing industrial parks, and in extending its manufacturing and value chains.
Such new partnership models also hold the potential to be China's new diplomatic card. Beyond exporting China's capital, the "One Belt, One Road" strategy is an important opportunity for the Asian superpower to express a brand new vision of global interests in the spirit of what Chinese leaders refer to as a “community of destiny.”
It will be interesting to see what the impact of the free trade zones will be back home. Will this further opening to the world force China to reform internally? As a rising power, China should grasp this moment as a historic opportunity.