Prof Wei Xiangdong talks about the latest development of the “Belt & Road” initiative
The “Belt and Road” initiative has been introduced by the Central Government for three years with the aim to promote economic cooperation between “Belt and Road” countries. This development strategy has been echoed proactively by related Government departments and bodies, industrial and commercial sectors and other civil organisations in Hong Kong, and is a topic of keen concern for the academic sector. Prof Wei Xiangdong, Dean of the Faculty of Social Sciences, Director of the Pan Sutong Shanghai – Hong Kong Economic Policy Research Centre, and Director of China Economic Research Programme of Lingnan University talked to Lingnan Touch about the latest development of the “Belt and Road” initiative, and related research and exchange efforts by Lingnan University.
What is the strategic implication of the development of the “Belt and Road” initiative to the economies of the Mainland and Hong Kong?
After the “Belt and Road” initiative has been introduced for three years, over a hundred countries and international organisations have participated in the initiative, and China has signed cooperation agreements with over 30 countries and started international cooperation related to industrial production capacities with over 20 countries. Financial cooperation, with the Asian Infrastructure Investment Bank and Silk Road Fund being the most notable examples, is also deepening.
From June 2013 to June 2016, the trading volume of China with Belt and Road countries amounted to US$3.1 trillion, equivalent to 26% of its total foreign trade. China’s cumulative investment in the Belt and Road countries totaled US$51.1 billion, accounting for 12% of its total foreign direct investment in the same period. China has also set up 52 economic and trade cooperation zones in 18 Belt and Road countries, with 13 of them having passed the assessment with the accumulated investment completed reached US$15.6 billion.
It is apparent from these facts that the “Belt and Road” initiative is a novel and relatively effective model for China as well as Belt and Road countries and regions to enhance their internationalisation. It is drawing attention and participation from more and more countries and international organisations, and brings substantial benefits to the economies of the Mainland and Hong Kong for their search for new growth momentums.
What are the achievements of the “Belt and Road” initiative so far? What impacts will it bring to the Belt and Road regions?
The “Belt and Road” initiative has many notable achievements since it was launched. In terms of policy communications, China took bilateral diplomatic efforts actively, and successfully made use of the advantage of home-field diplomacy at the APEC Conference, the G20 Summit, and the Conference on Interaction and Confidence-Building Measures in Asia to project China’s voice to promote the “Belt and Road” initiative on multilateral occasions.
In terms of trade facilitation, China has actively put forward policies and issues that promote global free trade. At present, there are eight free trade zones under negotiation and five are under study. At the same time, integration of customs clearance for the Silk Road Economic Belt is promoted through forums for heads of customs administrations.
On financing and capital flow, the Silk Road Fund has announced three substantive investment projects, while the Asian Infrastructure Investment Bank has approved the first batch of four loan projects in 2016, and the banks in BRICS this year have made five loan projects public and issued RMB$3 billion Green Bonds.
On connectivity of facilities, China has built over 30 large-scale transportation infrastructure projects, and signed and built 40 major energy projects including power stations, electricity supply, and oil and gas transmission, involving 26 “Belt and Road” countries.
Regarding civil exchange, China has actively expanded exchanges and cooperation in education, culture, journalism, sports and tourism to strengthen friendly exchanges between people of the “Belt and Road” countries, in the hope of enhancing mutual understanding and friendship.
As the “Belt and Road” initiative covers a wide geographical span, it inevitably faces threats of political changes, terrorism and default risks in some individual locations. But overall speaking it brings improvement and enhancement opportunities to the infrastructure, shipping and rail transport facilities in the “Belt and Road” countries which out-weight risks in general. As long as the Mainland and Hong Kong want to achieve higher economic growth and diversify their industrial development, promoting the “Belt and Road” initiative is a must.
What opportunities and challenges will the “Belt and Road” initiative bring to Hong Kong and how should it respond?
The “Belt and Road” initiative can bring huge opportunities for Hong Kong in various sectors such as finance, logistics and shipping, with the most direct one being the increase in the financial sector’s opportunities in investment and financing, mergers and acquisitions, sales transactions, trade settlements, credits, credit guarantees and risk management. These opportunities must be grasped properly.
As far as the financial industry is concerned, according to the estimation by the Asian Development Bank, the demand for infrastructure investment in Asia will reach US$730 billion per year by 2020, and the demand for funds is very pressing. At present, the capital of the Asian Infrastructure Investment Bank, the banks in BRICS and the Silk Road Fund is still insufficient to provide support for the Belt and Road countries. As one of the international financial centres in Asia, Hong Kong is a mature investment and financing market with rich private capital, which can make up for the deficiency. Hong Kong should actively seize the “Belt and Road” initiative opportunities to provide multiple financing channels for infrastructures in Asian countries, such as setting up investment funds for the “Belt and Road” countries and actively involving in business of the Asian Development Bank.
On the other hand, the Hong Kong society should also address the challenges posed by the “Belt and Road” initiative, for instance, by deepening their understanding of relevant policies and the international perspective of China and strengthening applied policy research on the initiative, so as to deliver more timely and practical information to different sectors in Hong Kong to facilitate better use of the city’s unique advantages to support the construction of the “Belt and Road” initiative.
How can Lingnan University promote more in-depth dialogue and cooperation between experts and academics on the “Belt and Road” initiative?
As a tertiary institution in Hong Kong, Lingnan University has a relatively strong research capacity in economics related subjects. The Faculty of Social Sciences, Pan Sutong Shanghai - Hong Kong Economic Policy Research Centre and the China Economic Research Programme of the University co-organised the “‘Belt and Road Initiative’ and Hong Kong-Macau Developmental Opportunities Symposium” in 2015, and organised the Academic Conference and International Forum on “China’s Belt and Road Initiative: Recent Policy Development and Responses from Other Countries” in December this year. Besides, Lingnan is putting much efforts in related policy research on the “Belt and Road” initiative in the hope of providing research results on a wide range of applied policies for different sectors’ reference, and further promoting the economic growth of Hong Kong and China.
On the other hand, as the “Belt and Road” initiative is a very sophisticated systematic project, Lingnan needs to strengthen inter-disciplinary research with different sectors, especially the academic sector. We are actively exploring the possibilities of cooperation with Mainland and overseas research institutes and universities as well as business organisations, and hope to continue with organising forums on related topics for exchange between different sectors.