Trade along China’s ‘One Belt, One Road’ won’t succeed without the currency of trust
Frank-Jürgen Richter says inherited cultural and political attitudes in Central Asian countries, which are key partners of the Chinese-initiated project, mean there is much work to be done to foster cooperation
The International Monetary Fund and OECD have forecast global growth will be about 3 per cent, rather than the traditional average of almost 4 per cent. This seems about right, given that the economies of most developed and major developing economies are struggling, for many reasons.
The first is due to the enmeshed cogs of globalisation which determines that, if part of the economy slows, it all slows, though not in each sector instantly.
Second, looking to a fantasy future when all nations become developed, surely global growth must be zero as all we manufacture would be for replacement. A reduction of the 4 per cent average is to be expected as the old nations are already developed and the massive Asian nations, while still claiming developing status, are in many respects developed, so they will exhibit slower growth. Thus, China’s growth might soon be 5 per cent, according to some pessimists.
However, ahead of the G20 meeting of finance heads in Shanghai this week, China has announced US$61 billion in local infrastructure investments to “fill out” earlier investments and has emphasised its economy is in good health. Goldman Sachs has chided investors, both private and institutional, saying the only real issue is “fear itself”: investors ought to stand steadfast.
When President Xi Jinping (習近平) visited Central and Southeast Asia in late 2013, he announced his new “One Belt, One Road” initiative to jointly redevelop local economies and infrastructure, building on China’s growth.
The belt and road will track along the historic Silk Road across land and via maritime routes throughout Eurasia. Over land, it reaches across Central Asian countries to link with Europe as the “Silk Road Economic Belt”; and, via the sea, the “Maritime Silk Road” will redevelop many ports in the South China Sea and the Pacific and Indian oceans.
Unlike the original Silk Road development 1,000 years ago, when the people along the road knew of little beyond their short trading journeys to the nearby market towns, most today know about the other nations via TV and the media. But few, even now, really understand how to trade with others – mistakes are and will continue to be made.
We often hear excuses about failures to make a deal stick, although the initial opportunities looked good. We tend to blame others’ cultural differences. Really, though, shouldn’t we look to ourselves, and perhaps examine our knowledge of others, their situation and their history?
When we understand where we and others come from, and others’ beliefs and traditions, then jointly we can build a better future.
Old Soviet behaviour and mindsets are embedded in many Central Asian states which have, to an extent, limited their broad development. With regard to roads and rail logistics, Chinese managers will have much to teach to ensure the free flow of materials linking to the east and the west.
Mutual suspicion will need to be tempered by careful analysis and teach-ins, as well as through learning each other’s languages: no small undertaking. These aspects are important, given that one goal of the Chinese initiative is to develop a strong economic belt along the road.
China’s altruism in promoting “One Belt, One Road” could be construed as economic exploitation, especially as the investment status of Central Asian states has been downgraded by ratings agencies, such as Standard & Poor’s. In fact, most oil-based economies have been downgraded recently, given that their fiscal budgets were created with the expectation of oil prices at US$80 a barrel and upwards. Currently, none of the Opec nations are anywhere close to breaking even, with oil at US$30 a barrel.
Thus, the mineral-rich Central Asian nations are cash-strapped and need considerable aid to redevelop. China can supply the financial and in-kind aid through deployment of staff across many sectors – but I fear the hosts may resent or misunderstand the mutual benefits that can evolve.
It is said that a strong economy develops personal wealth and well-being for the populace while also minimising discontent. Think tanks, commentators and the media can aid Central Asia’s redevelopment across a wider spectrum of commercialism than its present reliance on fossil fuel sales. Communicators can analyse and clarify the “grand plans” to help reduce popular anxiety.
Increasingly, better communication of goals will be necessary after 2020 when all nations ought to have ratified the “Kyoto II Protocol”. All agreed at the UN climate change meeting in Paris last December to reduce atmospheric pollution, giving themselves until 2020 to agree on details. The use of coal will be strongly reduced in favour of oil and, better still, gas, to generate electricity – but it will be green energy from renewables like sunlight, wind and hydropower that everyone will concentrate on.
There will be ample opportunity for Central Asia to join this revolution. The future could look bright for China, Central Asian nations and the world. All it will take is for trust and cooperation to be nurtured along the route.
Dr Frank-Jürgen Richter is founder and chairman of Horasis, a global visions community