Belt and Road Initiative: Enhancing Regional Economic Cooperation and Improving Global Governance

Regional Economic Cooperation

Over the past three years, the Belt and Road Initiative has proved itself a major player in regional cooperation, particularly economic development. It has achieved many positive outcomes in such fields as infrastructure, trade and investment, financial cooperation, and collaboration in productivity.

Infrastructure is a key aspect of the initiative. Several transnational railways are under construction, including the one linking China and Mongolia, one linking China and Laos, and the Moscow-Kazan and Jakarta-Bandung high-speed railways. Several block trains have been running between China and European countries. The expressway linking Karachi and Lahore, Gwadar Port in Pakistan, and Kyaukpyu Port in Myanmar is also underway.

Other projects include Line D of the Central Asia-China gas pipeline, the China-Myanmar oil and gas pipeline, Angren thermal power plant in Uzbekistan, and Qasim thermal power station, Karot hydropower station, and Karachi nuclear power station in Pakistan.

The Belt and Road Initiative infrastructure projects are colossal in both quantity and scale. As most transcend the national boundary they entail close cooperation between China and the relevant countries. Thus far, the common practice is for China to invest the bulk while related countries buy shares. The projects employ local workers, so promoting the job market. Those completed and in operation are thriving.

The initiative also promotes trade. National Bureau of Statistics data show that in 2016 the total volume of Chinese commodity trade experienced a dip, year-on-year, of 0.9 percent. However, the commodity import-export volume with countries along the Belt and Road totaled US $1 trillion, – a 0.5 percent rise – accounting for 25.7 percent of China's yearly cargo trade volume in 2016.

The initiative has also promoted investment. Chinese Ministry of Commerce statistics show that China's FDI (excluding banks, bonds, insurance) to countries along the Belt and Road reached US $14.5 billion in 2016, while the reverse flow hit US $7.1 billion. China's net FDI (US $7.4 billion) in the region represents a 17.5 percent hike over the previous year. Chinese enterprises have moreover established 56 trade and economic cooperation zones in more than 20 countries along the routes, with an aggregated investment of US $20 billion, generating revenues for these nations of more than US $1 billion, as well as about 200,000 jobs.

The prospects for financial cooperation are broad. Bank savings in countries along the Belt and Road are relatively low and are incapable of supporting the necessary resource exploitation and infrastructure development. China, by contrast, has abundant savings and funds which can be channeled into these countries. Chinese banks have so far opened an estimated 100 branches and offices in more than 20 countries along the Belt and Road. Chinese private enterprises have also invested in the banking sectors of Central and West Asian countries, having successfully merged with private banks while also opening new ones.

There are also opportunities for energy cooperation. The Belt and Road Initiative traverses a region that is witness to the world's most robust energy production and consumption. In recent years it has produced about 70 percent of the world's coal, some 60 percent of its petroleum, more than 50 percent of its gas, and generated about half of its electricity. Oil production is a good example. The top two producers – Saudi Arabia, which produces 15 percent of the world's petroleum output, and Russia, which contributes 10 percent, are both located here.