By Wang Yiwei     Source: Chinese Social Sciences    Published: 2016-9-8

In a recent speech on the “Belt and Road” initiative, Chinese President Xi Jinping said that the Belt and Road can be seen as an opportunity to promote transnational interconnection, improve trade and investment cooperation, advance cooperation in international capacity and equipment manufacturing to rebalance and stabilize the world economy.

After giving an overview of the strategy, Xi pointed out ways the world economy can recover from the international financial crisis and realize sustainable development. The strategy has the potential to rebalance the world economy in three ways.

First, it can rebalance the driving forces for economic development. Since the outbreak of the financial crisis, China has become the world’s major engine of growth, contributing more than 30 percent. The proposal of the “Belt and Road” strategy is to let other countries and international organizations get on the fast track that China has laid out and share the benefits through cooperation.

The strategy focuses on building infrastructure and is tailored to the requirements of countries along the route, allowing them to industrialize, modernize and improve their capacity to build infrastructure.

It creates sustainable momentum for economic growth. By building roads, railways and industrial parks, and initiating cooperative projects around the world, China cultivates one source of growth after another, rebalancing the forces driving global development.

The second component of the strategy is balanced development. The Western countries established the modern world-system, realizing the trajectory of capitalism that Karl Marx predicted more than a century ago in the Communist Manifesto, i.e. the countryside became dependent on the towns, the East on the West and the poor nations on the rich.

To address uneven development, the “Belt and Road” strategy advocates mutual connectivity in the fields of policy, facilities, trade, capital and quality of life. It attempts to coordinate political and economic development as well as development in cores and peripheries at home and abroad. These measures can effectively change the dual economic structures seen in many developing countries and bring benefits to Chinese people and people along the route. Also, by calling for a “green, healthy, intelligent and peaceful” Silk Road, the strategy will promote the UN 2030 Sustainable Development Goals.

The third one is the rebalancing of interactions. The strategy is best encapsulated by the expression “mutual connectivity,” namely developing vertical and horizontal linkages at the same time. China-Africa cooperation is an example. Before, there were more vertical interactions between African countries and other countries, while the continent lacked horizontal connections within. In some cases, flights had to be rerouted through Paris just to arrive at a neighboring country.

The concept of mutual connectivity helps Africa to build endogenous development momentum and form economic zones through infrastructure cooperation within the region. Its ultimate goal is to realize industrialization and modernization in Africa by fostering economic growth points, and then it will promote the development of surrounding areas.

Currently, the Trans-Pacific Partnership Agreement, Transatlantic Trade and Investment Partnership and other mechanisms have yielded no fruits, while the Belt and Road initiative has become the most feasible and influential framework for international cooperation in the post-crisis era.

By increasing international and regional cooperation, the “Belt and Road” strategy has lit a beacon that illuminates a path out of economic hardship, bringing hope to investors around the world. Right now, more than 100 countries and international organizations have joined the mechanism, while other organizations are showing positive attitudes. More financial cooperation will take place following the models of the Asian Infrastructure Investment Bank and the Silk Road Fund.

The author is a Senior Fellow of Chongyang Institute for Financial Studies, Renmin University of China.