Distinguished guests, ladies and gentlemen,
Just now, Mr. Hu Chunhua, Vice Premier of the State Council of China, delivered an important speech; Mr. Raffarin, Ms. Haidara and Mr. Jeremić made enthusiastic addresses. Their speeches recognized the significance of this conference while making a great many insightful and valuable recommendations for the future construction and development of the Belt and Road. I would like to extend my deep appreciation for them. I would also like to take this opportunity to share my thoughts for your reference.
First, today's world economy is facing dire challenges, and hence it is particularly necessary and urgent to jointly build the Belt and Road.
Since the Industrial Revolution, globalization has played an increasingly important role in promoting the development of the world economy and the progress of human civilization. Since the end of the Cold War, economic globalization has further deepened the international division of labor and propelled the rapid growth of the global economy. Following the outbreak of the international financial crisis in 2008, the problems amassed over a long period of time in the world economic development have been increasingly pronounced and acute, with in-depth structural adjustment badly needed. It is imperative that all countries in the world jointly rise to the challenges, push forward structural reform and further promote globalization. Yet, there is a major power moving against the tide of economic globalization, prioritizing their own strategies, practicing trade bullying, withdrawing or threatening to withdraw from a string of multilateral cooperation mechanisms, thereby casting shadows on the global economic resurgence.
History proves that the practice of "restricting one's activities to a designated area" and "beggar-thy-neighbor" is of no avail in breaking out of a crisis; they instead undercut the global division of labor and trading system on which the world economy operates, thus further aggravating the difficulties facing the global economy. In 1930, the Hoover Administration promulgated the Smoot-Hawley Tariff Act, which substantially hiked import tariffs on more than 20,000 imported commodities, with a view to slashing imports and destocking domestic products. However, the Act triggered a trade war, promptingthe U.S. exports to plummet. Many historians believed that the US's protectionist policy was one of the causes of the World War II.Now, certain country practices trade protectionism time and again, which will inevitably incur varying degrees of damages to itself, other countries and the world at large. As per the IMF's projection in mid-October this year, the global growth rate was expected to be 3.7% for 2018-2019 due to trade protectionism among other factors, 0.2 percentage points lower than the forecast in April this year. What would happen to today's world economy if there were no such factor as the expansion of trade protectionism? The answers may vary, and yet they must be much more optimistic than they are now.
We should clearly identify that the problems arising in the course of economic globalization should be dealt with by further promoting globalization and addressed by improving globalization. Over the past decades, the major problems of economic globalization have been a lack of inclusiveness, benefits for all and equilibrium. On the one hand, the interests of developed and developing countries are unevenly shared; on the other hand, such is also the case with all walks of life within developed and developing countries. Presently and globally, the richest 1% of the population enjoys more wealth than the remaining 99% combined, while over 700 million still live in extreme poverty. Faced with such a situation, the Chinese government proposes to make economic globalization more open, inclusive, universally beneficial and balanced, in a bid to jointly build a community of a shared future for mankind.
Jointly building the Belt and Road is a practice of such philosophy. The implementation of this initiative will help improve the way of globalization and bolster the in-depth development of economic globalization, while also helping get the global economy out of the current predicament. The initiative to jointly build the Belt and Road is open. Countries along the route or not, developed and developing ones, can all participate. Jointly building the Belt and Road is inclusive. It is compatible with the EU's recently released The EU Strategy on Connecting Europe and Asia and the ideas of regional cooperation set forth by other relevant countries, instead of being mutually exclusive. The achievements of the Belt and Road construction is shared. They will benefit all participants and different social strata of cooperating parties.
Second, joint building the Belt and Road has not only made important headway, but also accumulated a wealth of experience.
China is the initiator of jointly building the Belt and Road, and yet in so doing it calls for the cooperation and support of relevant countries. With the concerted efforts of all countries, we have achieved fruitful results in jointly building the Belt and Road in the past five years.
First, we have further pooled consensus on building the Belt and Road through policy coordination and strategic alignment. Currently, China has inked cooperation documents for Belt and Road with over 100 countries and international organizations, while also actively promoting the alignment of the Belt and Road construction with EU's Juncker Plan, Russia's Eurasian Economic Union, Kazakhstan's Bright Path, African Union's 2063 Agenda, and the UN's The 2030 Agenda for Sustainable Development. The joint construction of Belt and Road and its core tenet of achieving shared growth through discussion and collaboration has been inscribed into the outcome document of important international organizations represented by the UN.
Second, the connectivity and facilitation of infrastructure has been improved through facilities connectivity. We attach great importance to the hardware construction of connectivity, vigorously promoting the facilities connectivity in the fields of transportation, energy and communications, steadily advancing the construction of China-Laos Railway, China-Thailand Railway and Hungary-Serbia Railway. We also pay attention to the software construction of connectivity, actively promoting the coordination of rules and standards with relevant countries, signing bilateral and multilateral agreements on rules and standards in railway, highway, waterway, civil aviation, posts among others. We focus on building a more efficient transport network and support the inauguration of the China-EU express trains. By the end of August this year, the cumulative number of China-EU express trains had exceeded 10,000, reaching 14 countries and 42 cities in Europe.
Third, China's trade with countries along the route has been scaled up through unimpeded trade. Over the past five years, the total volume of trade between China and the countries along the Belt and Road has surpassed US $5 trillion, whereby China has become the largest trading partner of 25 countries along the route and signed or upgraded the FTA with 13 countries along the route.
Fourth, we have provided vigorous financial support for the Belt and Road construction through financial integration. We have promoted the establishment of the Asian Infrastructure Investment Bank(AIIB), set up the Silk Road Fund, steadily facilitated the use of RMB in cross-border transactions, kept stepping up support for development-and policy-based finance, propelled cooperation with the European Bank for Reconstruction and Development among other bilateral development institutions, and jointly ratified the Guiding Principles on Financing the Development of the Belt and Road with 26 countries. Over the past five years, China has directly invested more than US $70 billion in the Belt and Road countries, with an average annual growth rate of 7.2%.
Fifth, we have laid the foundation of people connection for jointly building the Belt and Road through people-to-people bonds. We attach great importance to strengthening cooperation with countries along the route in the areas of science, education, culture and tourism. In the past five years, cultural exchanges between China and the countries along the route have been increasingly diverse in forms and rich in contents; the number of people participating in cultural exchanges has been growing, exerting greater and greater implications. Statistics show that international tourism along the Belt and Road accounts for some 70% of the globe’stotal. The number of students studying in China in 2016 and 2017 hit 208,000 and 317,000 respectively. In 2017, the number of Chinese students studying in countries along the Belt and Road stood at 660,000.
In the past five years, the reason why we have been able to achieve such praiseworthy achievements in the joint construction of Belt and Road is that we have always adhered to the "four focuses":
First, we focus on integrating the joint construction of the Belt and Road with the requirements for the sustainable development of the countries along the route. We have pushed forward the construction of the Belt and Road fully based on our common needs, and we have never practiced "forced purchases and sales". We do not export China's overcapacity, but give play to China's advantages in construction, production and operation and achieve win-win development with the countries along the route. For example, the first automobile joint venture between China and Belarus, Belarus Geely Automobile Co., Ltd., not only fills the gap in light vehicle manufacturing in Belarus, but also improves the automobile industry chain in the country. The project was officially put into operation in last June and has materialized 50% localization this year. For another example, Tajikistan used to rely largely on hydropower stations in its territory to generate power. In the dry season of winter, it is common that there are limited power supply and heating shutoff across Tajikistan. The Phase II of Dushanbe No. 2 Thermal Power Plant, which was built in collaboration with Tajikistan, guarantees 68% of Dushanbe's power supply and 50% of its heating demand in winter.
Second, we focus on taking businesses as the main body and market as the orientation, pushing forward the Belt and Road construction in accordance with commercial principles. Chinese businesses have actively partaken in bidding and tendering in countries along the route, and the projects they undertake and operate in such countries are based on scientific feasibility studies and meet the requirements of proprietors of the host country. For instance, in the construction and operation of the Addis Ababa - Djibouti Railway, Ethiopian Railway Company and Djibouti Railway Company established a joint venture in August 2015, inviting China Civil Engineering Construction Corporation (CCECC), China Railway, Turkish Railway, French Railway and German Railway to bid for right of the railway operation and management. In July 2016, China Railway and CCECC, which had the honor of winning the bid, signed a six-year operation and maintenance contract with the railway joint venture set up by Ethiopia and Djibouti after the completion of the railway. While carrying out the construction and operation of the Railway, Chinese companies operate in line with their business models, adopting the model of “whole industry chain going out + comprehensive development along the railway”, participating in investment and construction of industrial parks along the railway, and boosting the integrated development of railway and industry.
Third, we focus on conserving the ecological environment and seeking green development with countries along the route. We have noticed that the ecological environment of the countries along the Belt and Road is fragile at large, and thus we must practice the philosophy of "green development" in jointly building the Belt and Road.Last year, Guidance on Promoting Green Belt and Road issued by relevant ministries and commissions of China called for that Chinese enterprises investing overseas pay attention to the local ecological and environment protection, and that they should not sacrifice the environment at the expense of business interests. In practice, Chinese enterprises have also conscientiously protected the local ecological environment when carrying out investment and business activities in countries along the Belt and Road. For example, when building the Mombasa-Nairobi Standard Gauge Railway (SGR) (from Mombasa in eastern Kenya to capital Nairobi), Chinese enterprises specially set up wildlife corridors, barriers and drinking water culverts, which were highly hailed by foreign media. According to some international media, "Even giraffes are satisfied with the Chinese-built railway in Africa".
Fourth, we focus on fairly sharing the fruits of development, so that the Belt and Road will benefit the people along the route more. Over the past five years, the direct investment of Chinese enterprises in the countries along the Belt and Road has created about 200,000 jobs for the local market. Two years ago, when visiting Serbia, I learned that the Smederevo Steel Plant, once Serbia's largest steel company, had been losing money for years, and that the Serbian government had provided a large number of subsidies to the plant every year. Later, under the framework of jointly building the Belt and Road and after two years following the plant's merger with China's HBIS Group Co., Ltd, the plant has already turned losses into gains. Not only did it need government subsidies, but also paid taxes to the government and created jobs for more than 5,000 people.
Third, we should enrich and improve cooperation, so as to deepen the Belt and Road construction.
In the face of the new situations and new challenges, we should, on the basis of summarize experience, explore more fields of cooperation and innovate the way of cooperation; we should transform the joint construction of the Belt and Road into a powerful impetus for building an open world economy and into a powerful support for new agendas for human development in the new technological revolution.
First, countries along the route should take upholding the multilateral trading system and improving the international economic and trade rules as their mission, work together to build an open world economic system. Economic globalization is the trend of our times and building an open world economy is an inevitable requirement for the development and progress of human society. Countries along the Belt and Road should strengthen communication, oppose all forms of trade and investment protectionism, abide by the principles of free trade, jointly create conditions for freer circulation of goods and render the flow of factors more convenient. In the process of jointly building the Belt and Road, all parties should actively explore approaches and instruments to achieve inclusive, universally beneficial, balanced and win-win development through equal-footed consultation. All parties should step up their efforts and speed up their paces to negotiate and sign more bilateral and multilateral FTAs, so as to provide experience for the reform of the WTO and ideas for the reform of the global governance system.
Two, we should give better play to the role of the Belt and Road in pooling and allocating production factors, fully unleash the comparative advantages of all countries, and form a powerful driving force for global economic growth. Countries along the Belt and Road boast various comparative advantages. Some are at the early stage of industrialization with great potential in the market, whereas there is a "financial gap" in their development. Some are at the mid-stage of industrialization, with strong infrastructure construction and industrialization capacity, and yet there are weaknesses in their technology development. Some are at the post-industrialization stage with strong innovation capacity, but their domestic markets are highly saturated. Under the framework of the Belt and Road, the comparative advantages of all countries can be brought into full play, and the comparative disadvantages of such countries can all be overcome, and the development of all countries can be relatively fully realized. All countries along the route should spurn narrow economic nationalism and make efforts to better build and utilize the broad platform in the fields of infrastructure construction, policy coordination and rule alignment provided by the Belt and Road in a more open and inclusive manner.
Third, we should work together to build an innovative community and jointly embrace the advent of a new round of global scientific and technological revolution and industrial revolution. In today's world, the new technology revolution and the new industrial revolution are germinating and developing, with both challenges and opportunities. How to deal with the challenges and turn them into opportunities hinges upon the overall innovation capability and cooperation of all countries and all parties along the route. At present, the complexity of technology is increasing, so is the difficulty of innovation. Only by establishing an innovation community can we make a breakthrough in the field of innovation. Countries along the route should focus on the needs of jointly building the Belt and Road, in an effort to win more room for development in the new round of technology and industrial revolution through the connectivity and sharing of innovation resources, as well as ramped-up endeavors in key scientific and technological collaborative research.
Four, we should adhere to the problem-oriented principle and better give play to the role of jointly building the Belt and Road in achieving the UN's 2030 Agenda for Sustainable Development. The 2030 Agenda for Sustainable Development covers a wide range of areas, but there are two major issues of particular concern to the international community: poverty eradication and green development. While jointly building the Belt and Road, countries along the route should focus on alleviating poverty and ecological conservation, deliver a good job in handling the relationship between economic growth and resident income growth, the relationship between industrial investment and job creation, and the relationship between economic development and ecological environmental protection.
Ladies and gentlemen!
The joint construction of Belt and Road has yielded fruitful results, with brighter prospects soon to come in the foreseeable future. Let’s work together though joint consultation and construction to make such the bright future materialize as soon as possible.
(A speech delivered by Mr. Li Wei, President of the Development Research Center of the State Council, at the Silk Road Forum 2018 on December 7, 2018.)