In the morning of September 23rd, 2017, keynote session on the theme of CHINA MINING Congress and Expo 2017 was held at Meijing Convention and Exhibition Center of Tianjin. Industry leaders and economists gave speeches concerning the theme “Promoting Mining Prosperity under the Silk Road Spirit”. Mr. Shi Yuong, Director of Institute of Spatial Planning & Regional Economy, Chinese Academy of Macroeconomic Research, was delivering a speech: “The Belt and Road” Initiative is the “Chinese Program” to Solve World Development Problems. (Photo: Hou Yijun Editor: Xu Xiaojing)
Distinguished Guests and Dear Friends:
Good morning!
I’m very hornored to be invited to CHINA MINING Congress and Expo 2017 and share with you my views concerning “The Belt and Road Initiative”.
Today, my topic is “The Belt and Road Initiative” is the “Chinese Program” to Solve World Development Problems. Why do I say so? As you know, the global economy has entered a new stage since the financial crisis in 2008. Under this background, president Xi Jinping proposed the Initiative of constructing the Belt and Road with some countries when he visited two countries with rich resources: Kazakhstan and Indonesia.
In March, 2015, president Xi Jinping put forward “The Silk Road Spirit” advocating peace and cooperation, openness and inclusiveness, mutual learning, mutual benefit and win-win cooperation and the initiatives of constructing the new Silk Road Economic Belt and 21st century Maritime Silk Road. On August 17th, 2016, president Xi Jinping hosted the forum to advance “The Belt and Road Initiative” in Great Hall of the People, in which, president Xi stressed that we should build a green, healthy, intelligt and peaceful Silk Road.
On May 14th this year, Belt and Road Forum for International Cooperation was held in Beijing, in which president Xi Jinping further put forward constructing the Silk Road featuring prosperity, openness, innovation and civilization. This time, Belt and Road Forum for International Cooperation received warm response from the international world. Over 270 achievements were made in this forum.
I want to share four aspects in my speech: Firstly, the world is facing with a series of prominent development problems; Secondly, the Belt and Road advocating common development; Thirdly, the achievements made in the past over 30 years laid a theoretical basis for the Belt and Road Initiative; Last, I want to share with you the practical development of the Belt and Road Initiative.
First, the world is faced with a series of prominent development problems
The financial crisis in 2008 broke the balance of global economy. The original balanced condition is characterized with APEC and Brazil providing energy resources for global industires, emerging economies represented by China providing laborers, land and converting resources from APEC and countries with rich resources to products, developed countries in America and Europe providing capital, market and technology, forming a compete cycling chain. However, the 2008 financial crisis shrinked the market of developed countries, breaking the original balanced condition and chain, which lead to slower demand growth or decline of manfactured goods. The export decline of emerging countries will result to a drop of demand for products from resource countries, the price fall of energy and mining products, breaking the original balance of the economy.
Therefore, the increased global trade is as low as less than 3% after the financial crisis. Last year, trade of real goods in terms of currency grew by just 1%, but the average growth rate of global trade grew by around 7%. Under this circumstance, the global trade entered a long recovery process from 2008, which was refered to by the president of IMF in Frankfurt last year as “a new and mediocre era” featuring too slow and too long. Under this circumstance, the world economic growth requires new growth drivers. Where are the new growth drivers?
This picture shows the main price changes after 2008, where you can see the data provided by BP on the right. As you can see, international oil price keeps sliding from the year 2007 to 2016, especially in 2012. Calculated by the price that year, the highest price is 116.7 dollors per barrel. You can see the Britain’s price on the left, which reflects the declining trend of the gap between the crude oil and basic products from 2012.
At the same time, another reason for these problems is the widened gap brought by economic globalization, because the main force of the last round of economic globalization is the layout of transnational companies on a global scale. Due to the different technologies, infrastructure, development environment, some countries are different in taking the transferred industries of developed countries. Some developing countries with poor infrastructure can not attract and use external productive factors. In the last round of globalization, these regions become blind zones, resulting to the bigger gap of development around the globe.
Where are these areas? The world economy is in Eurasia hinterland. Many closed inland countries and countries in the African continent have not begun the modern era when all the developed countries have entered the stage of post-industrialization. Therefore, the poor are mainly in Asian Continent and African areas.
This picture provided by the World Bank shows that 1.1 billiong people have no access to electricity by 2014. Among these people, 260 million are Indians, 75 million are Ethiopians, 43 million people are Bengalese. As we can see, these countries are lagging behind in geological conditions and infrastructure so they can’t take the transnational corporations-led facors layout.
The international economic governance structure is not resonable. According to the outlook report released by IMF in April, the contribution rate of emerging markets and developing economies to the global economic growth is around 80%. As you know, Chine’s contribution rate to the global economic growth was 32% last year. The contribution rate of developing countries and emerging markets to the global consumption growth is 85%. This change means the driving force of the global economy is changing from developed regions, developed economies to developing countries and emerging economies. At the same time, we can see the global governance system is not changing with this trend. Since last year, we see many European and American countries have seen de-globalization, which is not only thoughts, but also a practice now. We can see the trade protectionism is rising and its influence is increasing. Therefore, if we cannot correct this deviation from the perspective of governance structure, it will have bad effect on the sustainable and stable growth of the world economy.
These are the three problems facing the world economic development
Secondly, “The Belt and Road Initiative” advocating common development
Faced with these three difficulties, the “Belt and Road Intiative” advocated following the open spirit of regional cooperation. The Silk Road spirit we just talked about featured openess and cooperation, which stresses the orderly and free flow of economic factors through open and cooperative regional spirit to achieve the effective allocation of resources and the deep integration of markets and common development through cooperation
How to achieve common development in the “Belt and Road Initiative”? This initiative advocates extensive consultation, joint contribution and shared benefits and takes interest concerns of cooperation into consideration. In the spirit of equality and mutual benefit , participants can show their own biggest interest concern to enable every country to prioritize their problems and solve them according to their national conditions and their needs. This is an important basis to achieve common development.
“The Belt and Road Initiative” advocates five connectivities: policy, infrastructure, trade, financial and people-to-people connectivity. The five aspects are supported by the practice of China’s reform and opening-up in the past fourty years. We started with infrastructure in the 40 years’ reform and opening up and improved the infrastrucure of inland regions, so they have the condition to attract the external capital and convert the advantage in resources to the economic advantage. The “five connectivities” advocated by the “Belt and Road Initiative” is practicable and effective.
Thirdly, China’s economic development lays a theoretical foundation for “The Belt and Road Initiative”
We just talked about that many developing economies are not able to integrate the recycle of economic globalization because of geographic isolation for a long term and the shortage of infrastructure. In fact, this problem appeared after the second “World War”. As we know, many Asian, African and Latin American countries became independent after the second World War. How to achieve economic development after the political independence is a difficult problem for many developing countries. Therefore, developing countries explored a lot. However, I thought the economic development of developing countries is undesireable.
Quoting a number released by Growhth, the Nobel Prize Winner in 2011. The “high speed” he said refers to a growth speed of over 7%, but “sustainable” means the growth should continue for more than 25 years. According to his definition, 13 economies achieved so-called sustainable and high-speed growth. Among them, eight countries are in Asia, 13 economies are Botswana, Brazil, Mainland China, Indonesia, Japan, South Korea, Malaysia, Malta, Oman, Singapore, Taiwan and Thailand. China is the latest one to join this list and also one that grows the fastest. In the outcome 2017, all the previous countries are not in this list any more except China. China has made great achievement since reform and opening up 40 years ago, providing practical and successful examples that can be borrowed by developing countries in terms of the development path and model.
We have maintained double-digit growth rate for the past over consecutive 30 years. Our economic aggregate has increased from 4000 trillion dollars in 1990 to 11.4 trillion dollars last year, which also means the increased amount is 11 trillion dollars in 27 years from 1990 to 2017, more than one seventh of the global economic aggregate last year. At the same time, the percentage of Chinese economy in the global ecenomic aggregate increased from one fiftieth in 1900 to one seventh last year. Our GDP per capita increased from 344 dollars in 1990 to 8123 dollars last year, which means China has become a country with upper middle income. Therefore, China’s practice of reform and opening-up in the past 30 years has provided a successful example for developing countries which are exploring their own development pathes. We think this is a key to the success of the “Belt and Road Initiative”.
Based on this practice, “The Belt and Road Initiative” has received warm response from the international community. Until now, we have constructed railways, roads, waterways, airways, pipelines and information highways which connect with each other in the countries along the Belt and Road against problems of insufficient supply of infrastructure and being unable to attract and gather fators of production in these countries.
Since reform and opening up, China has adopted a model of taking the traffic as the lead and parks as the place to exploit resources. This model has been replicated by many countries along “The Belt and Road”. By the year 2014, the third year when “Belt and Road” initiative was proposed, the non-financial foreign investment made by Chinese companies has reached nearly 400 billion dollars, over one tenth of which went to the countries along “The Belt and Road”. The growth effects of “The Belt and Road” have expanded from China to China’s neighbouring countries, countries along “the Belt and Road” and other countries.
During this process, we put forward “The Belt and Road Initiative”, linking many development strategies and plans of the international community, such as Eurasian Economic Union proposed by Russian, Kazakhstan, Kyrgyzstan, Turkey’s economic corridor and “Two Corridors and One Circle” put forward by Vietnam.
All over the world, over 100 countries and international organizations support and participate in the construction of “The Belt and Road”. China signed “Belt and Road” cooperative initiative with 39 countries and international organizations, signed cooperative agreements with UNDP, APEC and World Health Organization. Until now, China has made investment in the construction of over 50 Economic and Trade Cooperation Zones along “the Belt and Road” with the total investment reaching 18 billion dollars, creating nearly 200 thousand jobs for these countries. Most of the investment are made in processing and manufacturing industry, which makes the conversion of the advantages of haveing rich resources possible.
You can have a look at this picture which shows the foreign investment of China in the past several years. The investment increased very rapidly from 3 billion dollars in 2000 to over 170 billion dollars last year. A few years ago, many western research instituions and reseachers stressed that China’s foreign investment concentrated on resources field in the research of China’s foreign investment issue. After “The Belt and Road” initiative was put forward, we mainly focused on international capacity cooperation and the connectivity of infrastructure and some scholars and media said China is exporting excess capacity to the international community and countries along “the Belt and Road”. Thid equals to exporting pollution. I want to share my views on this issue. I think it reflects that the market plays a decisive role in the allocation of resources, because China have the full industry chain in the energy resources and manufacturing area. China has 30 years of practice. Compared to many western transnational corporations, we have the competitive advantage in conract quotation in these fields; Countries along the Belt and Road are constructing infrastructure in a large scale to change their geographic conditions, so they need to develop energy and resources and construct infrastrucure? So What do they need most? They need steel, cement, building materials, glass, chemical products and automobiles, etc. One party has demand and the other has supply. At the same time, we have the competitive advantage in contract quotation. This kind of choice reflects the market’s role in the allocation of resources. At the initial stage of reform and opening up, we mainly attract labor-intensive manufacturing due to the comparative advantages in labor cost. When our resource conditions and our comparative advantages change, we gradually upgrade from traditional labor-intensive industries to capital and technology intensive industries. Therefore, this change conforms to the market rule.
Many of China Railway Express to Europe developed in the practice of “The Belt and Road” have some content related to resource based manufactures and finished products.
Except the previous aspects, in advancing “The Belt and Road”, we built the financing mechanisms under “The Belt and Road” which you are familiar with. The Asian Infrastructure Investment Bank, the multilateral financial institutions represented by Silk Road fund and the fund program of Chinese government play a important role in the construction of “Belt and Road” programs.
I want to take a few minutes to talk about the relations of “The Belt and Road Initiative” with energy and mineral resources products.
The places along the Belt and Road have rich resources. According to a research report, reserves of natural gas, oil, coal and iron ore is 53%, 17%, 25% and 20% of the total amount in the world respectively. This indicates that the cooperation on energy and resource fields is an important aspect in the construction of the“Belt and Road” initiative and the advantageous fields. In the past ten years, the trade volume between China and East Asian countries along “the Belt and Road” increased by 680%, a prominent change under the background of the sluggish growth of global trade.
As we can see, the foreign investment instituions are changing with the change of China’s comparative advantages. The left side of this picture shows the distribution of China’s foreign investment in diffierent fields. It can be found that the investment in mining is just 30% of that of renting and service sector. It means the growth of foreign investment in energy and resource fields in gradually displaced by the growth of other processing and manufacturing industry.
This picture reflected the annual indicators in 2015. We can see the red number -32 on the left, which prepresents the investment growth in mining. -32 means a reduction. This indicates China’s advantage in resources change according to the change of the environment of global economic growth. Energy and mineral resources are important fields for cooperation with . This number also reminded us that the cooperation in energy and mineral field requires transformation and upgrading and we need to develop towards a more technological, environmental-friendly, green and low carbon direction
Since “The Belt and Road Initiative” was put forward four years ago, China and the international community have been knowing and interacting with each other. “the Belt and Road” initiative has been recoginized gradually by the international community. The reason for “The Belt and Road Initiative” receiving recognition and active response of the international community is that “The Belt and Road” initiative complys with the general trend of openness and cooperation, mutual benefit and win-win progress and also meets the common demand of countries along the Belt and Road and made important contribution to solving the global economic problems, and creat new opportunities for the countries along the Belt and Road to use their own advantages and complement each other’s advantages.
When a series of problems faced with the global economy are not radically solved, sharing our views on mining cooperation under the background of “The Belt and Road” through this platform is of great significance to build a stable and better “Belt and Road” and achieve common development of China and countries along “The Belt and Road”. Wish this congress a great success!
Thank you!
Source: www.mlr.gov.cn Citation: www.mlr.gov.cn
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CHINA MINING Congress and Expo 2017 will be held at Meijiang Convention and Exhibition Center in Tianjin in September 23-25, 2017. We invite you to join the event and to celebrate the 19th anniversary of CHINA MINING with us. For more information about CHINA MINING 2017, please visit: m.balanzskin.com.
