Published on: 2017-03-30
Since its introduction by Chinese President Xi Jinping in 2013, the “one belt, one road” initiative – an ambitious plan to revitalize the ancient Silk Road overland and maritime trade routes linking East and West – has attracted considerable attention. And for good reason: The project, which involves more than 60 countries and quite a few international organizations, implies unprecedented opportunities – and challenges.
From China’s perspective, with its sources of GDP growth coming under increasing strain, China must continue to make progress in opening up the economy. That means building mutually beneficial relationships with neighboring countries, which can benefit by taking over some of China’s lower-value-added activities. China’s comparative advantages, including a global financial center in Hong Kong and a regional financial center in Shanghai, reinforce its leadership role. Add to that the recent surge in fast-growing, innovative companies, China is well placed to implement Xi’s ambitious vision.
However, it will not be smooth sailing. Like any cross-border initiative, the “one belt, one road” initiative will require wise diplomacy to manage relationships with diverse countries and careful planning to scale up effectively. Each country along the “belt and road” faces a unique combination of risks and challenges. The challenges may be complex, but the formula for navigating them is simple. China, as the leading promoter of the “one belt, one road” initiative, must take steps to ensure that businesses act responsibly. At the same time, China should implement a well-designed training program that provides officials at all levels of government and entrepreneurs with basic information about operating abroad. And it should do more to spur the involvement of Hong Kong – which possesses major advantages in finance and logistics, information accessibility, talent recruitment, and implementation of the rule of law – in the initiative. Last but not the least, the central government needs to strengthen the guidance of crisis management and exit strategies.
Realizing the “one belt, one road” initiative will not be easy. But China has all of the tools it needs to succeed. As long as it uses them in a way that is clean, green, and transparent, China and its neighbors will reap vast rewards.
About the Speaker
Prof LIU Mingkang is the BCT Distinguished Research Fellow, Institute of Global Economics and Finance, Chinese University of Hong Kong and Distinguished Fellow, Asia Global Institute. Previously, Prof. LIU served as the first Chairman of the China Banking Regulatory Commission (CBRC) from 2003 to 2011 and was a member of the Monetary Policy Committee of the People’s Bank of China. He is also the Vice Chairman of the Committee for Economic Affairs of the National Committee of the Chinese People’s Political Consultative Conference. Before heading the CBRC, Prof. LIU held various positions in both banking institutions and government agencies, including, among others, Chairman and President of the Bank of China (2000-03), Chairman of China Everbright Group (1999-2000), Deputy Governor of the People’s Bank of China (1998-99), Deputy Governor of China Development Bank (1994-98), Deputy Governor of Fujian province and Secretary-General of the Fujian Provincial Government (1993-1994). Professor LIU Mingkang received his MBA degree and the honorary doctorate from the City University of London.
The 208 State Road, China by Asian Development Bank / Flickr. https://flic.kr/p/dUSgz2