Belt, Road could stabilize vast area

China's "One Belt, One Road" initiative will have an impact far beyond Asia, according to an expert on US-China economic relations.

David Dollar, senior fellow with the Foreign Policy and Global Economy and Development programs at the Brookings Institution in Washington, said he welcomes the initiative and sees it primarily as an effort to improve infrastructure and accelerate industrialization in other developing countries.

"To the extent that it is successful, the whole world economy, including the US, will benefit," Dollar said.

"One Belt, One Road", which was proposed by Chinese President Xi Jinping in 2013, aims to revive the maritime and overland routes of the ancient Silk Roads. The ultimate goal is to encourage growth and cooperation along the routes.

Since its unveiling, China has announced a series of major energy and transportation infrastructure initiatives in Asia, including a recent $46 billion pledge to Pakistan, and it plans to do the same in the Persian Gulf, Eastern Europe and the eastern Mediterranean Sea region.

Scott Kennedy and David A. Parker, researchers in China studies at the Center for Strategic and International Studies in Washington, said that although infrastructure is at the heart of the initiative, the scope will extend well beyond that. Kennedy and Parker jointly wrote a report on China's initiative in April.

"The scope of the initiative will include efforts to promote greater financial integration and use of the renminbi by foreign countries, create an 'Information Silk Road' linking regional information and communications technology networks and lower barriers to cross-border trade and investment in the region, among other initiatives," they said. "New regional institutions, such as the Asian Infrastructure Investment Bank and New Silk Road Fund, are also designed in part to complement and support the Belt and Road's development."

"China has been very successful in exporting goods to the rest of the world in the past three decades," said Liu Jinxin, dean of the China-Kunming trans-Asia transportation logistics research institute. "Now it is high time that it strengthens its financial system to set up the rules in regional cooperation."

Yunnan province is the gateway to South and Southeast Asian countries, including Myanmar, Thailand, Cambodia, Vietnam and India, which will be important partners in the One Belt, One Road project. The central government has initiated financial reforms to allow Yunnan and the neighboring Guangxi Zhuang autonomous region to do experiments in their financial system.

"It aims for the joint development, common prosperity and for energy security, too," Zhuang said.

Improving the region's economy could deter terrorism and help stabilize Central Asia and the Middle East, a reason why the US should be more positive about the initiative as a stabilizing force for good in the region, Zhuang said.

Kennedy and Parker agreed, and wrote that "if this leads to more sustainable and inclusive growth, it could help strengthen the political institutions in the region and reduce the incentives and opportunities for terrorist movements".

But Dollar doesn't consider the initiative a way to solve China's industrial overcapacity.

"China already has a large trade surplus, and it would be hard for it to increase because the rest of the world does not want to absorb that much surplus," he said.

"Domestic reform is the key to dealing with the excess capacity. One Belt, One Road is not a substitute for domestic reform."

James Holmes, a China naval specialist at the US Naval War College, was quoted by Defense News as saying that the "Belt and Road" concept is still in the planning stages.

If China wants to create a parallel system in Eurasia and convince others that its system beats America's, it has to deliver the goods, Holmes said.

Holmes does not believe One Belt, One Road is a latter-day Berlin-Baghdad Railway, which was built in the early 1900s to link Europe with the Ottoman Empire and the Arabian Gulf. Unlike that project, this is an "economic project with indirect diplomatic, security and military implications," he said.

The China Finance 40 Forum, China's think tank, said that some US researchers are interested in the initiative.

"They are convinced that the rebuilding of the ancient trade routes will create new job opportunities, tap the potential to boost China's development and balance Russia's influence in Central Asia," it said.

lijing2009@chinadaily.com.cn