What Belt and Road mean for the world
In less than a month's time, President Xi Jinping will host the Belt and Road Forum for International Cooperation－his landmark program to invest billions of dollars in infrastructure projects across Asia, Africa and Europe. The vision of the Belt and Road Initiative (the Silk Road Economic Belt and the 21st Century Maritime Silk Road) projects is essentially about connectivity－facilitated by infrastructure.
If by working together, different countries' respective comparative advantages can be exploited－be it capital, technological know-how, logistical or construction capabilities, raw materials, or even China's industrial goods－infrastructure can be built efficiently and cheaply. This cooperative approach can spearhead development in low-income countries, and lift emerging economies out of the middle-income trap.
But investing in infrastructure is difficult. It requires large amounts of funding, and carries non-trivial political, sovereign and financial risk. Many governments are trying to solve this problem by improving their state governance, maintain policy continuity and provide an enabling environment for investment in infrastructure. They make a big push to promote public-private partnership, but successes are far and few between.
At a time when a large funding gap in world infrastructure impedes economic progress, when expansionary fiscal policy is particularly potent in creating jobs and stimulating the economy－someone has to take the lead. The objective is clear: the world needs to de-politicize infrastructure decisions, and create a dedicated international pool of long-term capital that are not dependent on taxes, or yearly appropriations of funds.
China is acutely aware of the urgency of infrastructure development in many low-income emerging market economies. The idea of connectivity initially emerged from cooperating with the members of the Association of Southeast Asian Nations. It then quickly became apparent that connectivity among Asian countries was not enough to achieve better economic results. If it is to play its maximum role, infrastructure needs to stride vast territorial boundaries.
Ahead of the Belt and Road Forum, some clarifications are in order. China is, first of all, not shy of proposing ideas, and then opening it for debate and discussion. But there needs to be someone to initiate, to organize and to take a leading role. Second, China needs to stress the participatory approach in implementing the Belt and Road Initiative. It has no geographical restrictions. It is inclusive, and global integration is what it is all about. Third, it is not about replacing the role of a dominant superpower.
The sequence of events reveals that China first proposed the initiative when Barack Obama was the US president, long before Donald Trump was elected. It is unlikely that its intention was to fill in the gap of a superpower as it rescinds from the world stage. It is just that somebody has to do the job.
And the United States is not doing the job even in the case of its own infrastructure upgrade. Americans are "stuck", with congestions, crumbling bridges and dilapidated roads. Bipartisan debates on how to spend taxes, and a lack of leadership, are reasons that the richest country's infrastructure is lagging behind. They have let politics get in the way.
Thus, China emerges as an obvious candidate－with capital, experience and a vision for global integration. As economist Jeff Sachs writes: "China has proved itself highly effective at building large and complex infrastructure (such as ports, railways, fiber-optic cables, and highways) that complements industrial capital, and this infrastructure has in turn attracted foreign private-sector capital and technology."
There are things that China could have done better. It could have run a better campaign to help advance the economic case. Economic strategy and skillful diplomacy would have to a great extent alleviated the concerns. Sometimes, China's lack of understanding and appreciation of local customs and cultures created barriers and raised tension with the local people. Some Chinese companies' behavior has been a cause of concern. Less than adequate attention to environmental protection and sustainability, and to the interests of the local community has been a convenient excuse for some people to disparage China's Belt and Road Initiative.
It is comforting to see that the Chinese government is fixing the problems, and the Chinese companies investing overseas, whether State-owned enterprises or private companies, have demonstrated their commitment to do a better job.
In the end, we cannot let politics get in the way of a truly global, economically sensible, 21st century initiative. The Belt and Road Initiative is like an orchestra. It needs a conductor and it casts its players around the world. Who becomes the conductor and who is picked as the first violinist is of course important. But more crucial is that it plays－and performs.
The author is a professor of economics at the London School of Economics, a world economic forum young leader.