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Trade and Investment—“Belt and Road” Initiative: Building Synergy with EU Policies and Strategies

Time:2017-09-05 11:01:36    Views:40745    Origin:Boao Forum for Asia

Prosperity is the common pursuit of human society. Currently, the impact of international financial crisis is lingering, economic recovery is sluggish and trade protectionism is rising. Against this backdrop, the “Belt and Road” initiative, with “connectivity” at its core, seeks to find new areas for economic growth, cultivate new competitive advantages and inject new impetus into Asia-Europe cooperation and sustainable prosperity by proactively promoting the strategic coordination among countries along the Belt and Road.

On September 14th and 15th, 2017, Boao Forum for Asia (BFA) will hold a special meeting themed as “Belt and Road” Initiative: Building Synergy with EU Policies and Strategies” in Paris, whose topics includes “Promoting trade and investment” will be discussed.

As of now, Justin KING, Vice Chairman and Head of Portfolio Businesses of Terra Firma; Penelope NAAS, Vice President for UPS International Public Affair; Jean-Charles SIMON, Managing Partner of SIMON ASSOCIES; TU Guangshao, President of China Investment Corporation; Jusuf WANADI, Senior Fellow and Co-founder of the Centre for Strategic and International Studies (CSIS) and ZHANG Xiaoqiang, Executive Vice Chairman and CEO, China Center for International Economic Exchanges will attend the session “Promoting Trade and Investment”.

Trade and Investment Are Important Engines for Promoting Asia-Europe Strategic Coordination

Over two millennia ago, various countries on the Asian and European Continents exchanged needed goods with each other on camel backs and by ships. As a result, the two ancient continents were brought into close contact with each other. Two thousand years later, the “Belt and Road” Initiative promotes Asia-Europe strategic coordination in a new form. In fact, be it Ancient Silk Road or the “Belt and Road” Initiative, it must be a road of trade in the first place. Only in the context of unimpeded trade will there be needs for infrastructure connectivity and financial integration as well as material base for people-to-people bonds.

On May 14, 2017, President Xi Jinping pointed out at the opening ceremony of the “Belt and Road” Forum for International Cooperation that trade is an important engine for economic growth. We should maintain the multilateral trading system, promote the construction of free trade zones and promote trade liberalization and investment facilitation. “Unimpeded trade” takes up the largest part in “Vision and Actions on Jointly Building Silk Road Economic Belt and 21st-Century Maritime Silk Road”.

As the influence of the “Belt and Road” Initiative is growing, the trade and investment activities along the Belt and Road are becoming increasingly frequent. According to the statistics of the Ministry of Commerce of China, in 2016, China's direct investment in the countries along the route amounted to $14.5 billion. Chinese enterprises are building 77 cooperation zones in 36 countries, and 56 of the cooperation zones are in 20 countries along the Belt and Road route, representing an investment of $18.55 billion cumulatively. 1082 enterprises have settled down in the cooperation zones with a total output value reaching $50.69 billion, contributing approximately $1.1 billion of tax revenue and creating 180,000 job opportunities for the host countries.

This group of figures is merely a concentrated and quantitative demonstration of the smooth flow of trade between Asia and Europe. On these two ancient continents, trade liberalization and investment facilitation is giving birth to new vitality and new growth constantly. Implementation of the “Belt and Road” initiative helps form a huge market throughout Eurasia.

China Railway Express to Europe is a case in point in terms of increased trade of the Eurasia. It not only realizes a leap across the region, but also a crossover in the trade system and infrastructure standards of different countries. The new Eurasian railway passes through a number of countries with different track gauge, different ports access conditions and different degrees of facilitation. Behind the opening of such a trade passageway are the multiple negotiations among governments and the signing of many trade agreements. China has signed agreements with 13 out of the 16 countries in Central and Eastern Europe to promote the Belt and Road initiative.

The head of China National Development and Reform Commission (NDRC) noted on August 17th that so far the China Railway Express has run a total of 4000 trips between China and Europe, reaching 31 cities in 12 countries. In China, trains loaded with computers, cellphones and auto parts are headed to Europe from 25 cities, including Yiwu, Zhengzhou, Xi'an and Chengdu, etc. Along the way, the trains carry commodities from Central Asia to Duisburg; on the way back, the trains will be loaded with Scotch whisky, French red wine, German auto parts and appliances, Czech crystal, Greek olive oil as well as many other European quality products and transport them all the way back to China.

Today, instead of the camel bells that have been echoing for over two millennia, we hear the long whistle of the trains, declaring the opening of a new era for the unimpeded trade between Asia and Europe. With a speed far exceeding that of ships and a price much lower than airfreight, the China Railway Express has become a third choice for Euro-Asia freight logistics, and it is gradually reshaping the logistics industry in Asia and Europe. In addition, the unimpeded trade as a result has brought countless opportunities and development along the route. Take the Chongqing-Sinkiang-Europe International Railway as an example. Thanks to China Railway Express, last year, Duisburg port became the only port in Germany that did not suffer losses and even made a record of profits instead. In the words of Ralph Moirel, Director of the Economic Promotion Bureau of the region, “China Railway Express is definitely a lucky key. It has the potential to further make Duisburg the center of trade between Germany and China.” The China-Europe Railway-Land Multimodal Transport Route also makes Chongqing, which does not produce any coffee beans, the world's third largest platform for coffee trade.

Adding radiance to the China Railway Express is the Maritime Silk Road, a long-standing important trade passageway that has brought vitality to the quiet ports. Pakistan's Gwadar Port, sitting at the intersection of Silk Road Economic Belt and the 21st Century Maritime Silk Road, is also the starting point of the China-Pakistan Economic Corridor on the Pakistan's side. At the inaugural ceremony, Pakistani Prime Minister Sheriff excitedly announced, “Today marks the dawn of a new era.” To him, Gwadar might be the next Dubai. Melaka Gateway east of Malacca and many Sri Lankan ports located in the center point of Indian Ocean Waterway are also ready to unleash their potentials.

At the same time, Italy, The western end point of the Ancient Silk Road, is also enjoying the unimpeded trade brought about by the “Belt and Road” Initiative. In early July 2017, the fourth edition of the “Italy Marine Economy” a research report released by Intesa Sanpaolo, believed that the “Belt and Road” Initiative will bring new opportunities for Mediterranean shipping and the Italian economy. Against the backdrop of China's increased investment in the infrastructure of the countries along the Belt and Road, Mediterranean shipping is expected to grow at a steady annual rate of 3% and the shipping capacity will reach 55 million TEU.

Remove Barriers for Trade Liberalization and Investment Facilitation

Breaking trade barriers is an important condition for unimpeded trade. In order to expand industrial investment and achieve unimpeded trade, during the “Belt and Road” Forum for International Cooperation, China signed economic agreements with more than 30 countries and negotiated free trade agreement with relevant countries. The Ministry of Commerce of China jointly issued Initiative on Promoting Unimpeded Trade Cooperation along the Belt and Road with more than 60 relevant countries and international organizations. China will hold “China International Import Expo” starting from 2018. From June 8th to 12th this year, the 3rd China–CEEC Investment and Trade Expo will be held in Ningbo, Zhejiang. This will be a grand international gathering for China and Central-east European countries to jointly discuss and build the “Belt and Road” and share the results of mutually beneficial cooperation.

Thanks to the joint efforts of countries along the route, a series of trade agreements that will promote the connectivity between Asia and Europe are under negotiation, such as the Regional Comprehensive Economic Partnership Agreement (RCEP), the ASEAN-EU Free Trade Agreement, the Bangladesh-Pakistan Free Trade Agreement, the EU-China Investment Agreement, the EU-Indonesia Comprehensive Economic Partnership Agreement, the EU-India Bilateral Trade and Investment Agreements, the EU-Philippines Free Trade Agreement, the EU-Thailand Free Trade Agreement, the India-Indonesia Comprehensive Economic Cooperation Agreement, and the Pakistan-Thailand Free Trade Agreement and so on.

With respect to promoting trade facilitation between Asia and Europe, solid progress has been made. On September 1st, the first inter-governmental AEO Mutual Recognition Agreement since the Chinese Customs implemented the AEO system came into force. The Chinese and Swiss Customs offered enterprises five convenient measures, including: reduction of goods inspection, assessment as safe trading partners, priority given to ensuring rapid clearance, designated Customs liaison, and priority clearance after recovery of trade suspension. At that time, the average inspection ratio and customs clearance time will be reduced by about 30%-50% when the AEO enterprises of the two sides deal with customs for export goods, which will effectively reduce trade costs incurred by ports, insurance and logistics for enterprises.

95% of the world's commerce and industry is closely related to the Internet. The world economy is transitioning to digitalization. The development of Internet technology provides a new channel for unimpeded trade. While improving the efficiency of the transaction, the Internet greatly reduces the cost of trade and provides more opportunities for SMEs. China is actively building cross-border electronic business platforms by leveraging its own experience and promoting enterprise “going out”. Alibaba's Chairman Jack Ma suggested that, in addition to WTO, e-WTP (World Trade Platform) should be established with SMEs playing the dominant role. With the advancement of digital connectivity between Asia and Europe, SMEs and e-commerce may play a major role in the trade and investment between Asia and Europe.

Remarkable achievement has been made in unimpeded trade. Various Eurasian countries have contributed to trade liberalization and investment facilitation. However, due to geopolitical reasons and differences in natural resources and culture, it will take time to gradually eliminate these trade barriers. Furthermore, as China and other emerging market economies are getting more and more active in going global, the mutual investment between Asia and Europe is also accelerating, and some new problems are emerging. Some European countries, for example, have recently introduced investment review policies for key infrastructure and sensitive areas.

The inherent problems are yet to be removed while new ones arise. What ideas will the “Belt and Road” initiative provide for promoting trade and investment between Asia and EU countries? What measures will be proposed to remove trade barriers and enhance trade protection. Only when Asia and Europe strengthen their macro policy coordination in economy, finance, trade and investment can they jointly create a favorable external environment. Greater progress of the “Belt and Road” initiative depends on more policy coordination more effective infrastructure connectivity, higher degree of unimpeded trade and financial integration and closer people-to-people bonds among the countries. Boao Forum for Asia Paris Meeting is ready to serve as an important platform for Asia and EU countries to have in-depth discussions on issues related to trade and investment in the implementation of the “Belt and Road” initiative.

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