3 Practice of the Belt and Road Initiative

Since it was proposed three years ago, the Belt and Road Initiative has fared smoothly. Initial headway has been made and cooperative achievements have beaten expectations.

3.1 Trade and investment

Statistics show that trade volume between China and countries along the Belt and Road routes have continually increased. In 2016, the total volume of trade amounted to 6.3 trillion yuan and its growth exceeded the overall growth of China's foreign trade. Bilateral investment has also continually increased and countries along the Belt and Road routes have become important destinations for China's outbound investment. By July, 2016, China had signed free trade area agreements with 11 countries along the Belt and Road routes and inked bilateral investment agreements with 56 countries along the routes. In 2016, China's direct investment in countries along the routes reached $14.5 billion, accounting for 8.5% of its total outbound direct investment. Chinese enterprises have established 56 economic and trade cooperative zones in more than 20 countries along the routes; their accumulated investment totaled $18.5 billion, creating $1.1 billion tax revenues and 180,000 jobs for host countries.

3.2 Infrastructure construction

Infrastructure interconnectivity is a priority of the Belt and Road Initiative. It is important for facilitating flow of resource factors, achieving intensive use of resource factors and expanding markets. In terms of overland connectivity, by July, 2016, altogether 39 trains have started to operate between China and Europe and the number of train journeys between them have exceeded 2,000. It takes only 12 days for cargo to be freighted from Chongqing Municipality of China to Duisburg of Germany, 60% less than sea transportation, and the cost is 80% less than air freight. A network connecting Asian sub-regions with other Asian regions, Africa and Europe is taking shape.

In terms of energy infrastructure construction, from October 2013 to June 30, 2016, Chinese enterprises signed a total of 40 major energy construction agreements, involving 19 countries along the Belt and Road routes. At the UN Sustainable Development Summit in September 2015, China first put forward the idea of constructing a global energy network to satisfy global demand for electricity using clean and green energy sources. China is a global leader in electricity transmission. It will actively push the sharing of regional energy resources by countries along the Belt and Road routes and promote optimization of green energy allocation to build a green Silk Road.

While the developing countries have a demand for infrastructure construction, the developed countries also want to cooperate with other countries in the energy sector. For example, the US' large infrastructure projects were mostly built from the 1950s to 1970s and many of them are aging. US President Donald Trump has called for rebuilding of the country's infrastructure to create jobs and boost economic growth. In March, President Xi Jinping told Trump in their meeting that the US would be welcomed if it wants to join the Belt and Road program.

China is a major power in terms of infrastructure construction. It is highly experienced and has continually made breakthrough in technology development and made much headway in innovation. It has become a world leader in many fields. Therefore, it can rely on its advantages in infrastructure construction to help promote development of countries and regions along the Belt and Road routes.

3.3 Production capacity cooperation

Since it initiated its reform and opening-up drive, China has seen its manufacturing develop at a fast pace. In early 1990s, China's industrial output of manufacturing sectors was about one fortieth of the global level; now it has risen to about one fourth. China has a complete industrial regime and it is the only country in the world to have all the 39 industrial groups, 191 major groups and 525 divisions in the UN industrial classification system. Against the backdrop of economic transformation and upgrading, China will give up its traditional role as a low-cost supplier and move higher in global supply chain and industrial chain. As the largest source of global supply chain, China will spin off a large part of its low-cost manufacturing. The relocation of the spun-off manufacturing capacity will bring opportunities to other countries and regions that are in the middle of industrialization and usher more developing countries and less developed regions into the modern global industrial chain.

Amid the global economic structural adjustment, China has accelerated the pace of its production capacities that have global competitive edge “going abroad” following the progress of the Belt and Road Initiative. Chinese enterprises have increased investment in countries along the Belt and Road routes to support their industrialization, upgrade their production capacities, and help them move higher in global industrial chain. Those countries have become more capable of producing semi-finished products. As they become more capable ofincreasing effective product supply, the possibility that they expand their scale of export to China increases so that their trade deficits with China can be narrowed and even reversed. It will also help improve China's overall trade environment and bring benefits to both China and its trade partners. The capacity cooperation between China and countries along the Belt and Road routes indicates that the program well balances both needs of China and other countries since it meets China's own demand for development while it is also in line with the requirement of international development.

3.4 Financial integration

Finance is the lifeline of economy. The financing bottleneck is a problem that affects infrastructure construction, strengthening of capacity cooperation and increasing of trade and investment and therefore must be solved. It is estimated that demand for investment in infrastructure involved in the Belt and Road Initiative exceeds $8 trillion. Global capital, including capital from the developed countries, such as the US and European countries, needs to be pooled to carry out the Belt and Road construction. The Belt and Road construction can drive global capital to flow into the real economy to help the world economy achieve healthy development.

In recent years, China has actively pursued cross-border financial cooperation with countries along the Belt and Road routes and international financial institutions. The AIIB, launched in December, 2015, focuses on supporting the energy, transportation and city development in countries along the Belt and Road routes. According to Jin Liqun, president of AIIB, the bank provided $1.727 billion worth loans for nine projects in seven Asian developing countries in 2016, attracting another $12.5 billion funds from public and private sectors. Among the nine projects, six are co-financed by AIIB and other multilateral banking institutions. The AIIB is making preparations for entering the global capital markets to issue debt. It also plans to cooperate with long-term private capital, such as commercial insurance companies and pension funds, to explore new ways of practical and effective cooperation with the private sectors. The bank also considers expanding cooperation with countries beyond the region to promote Asian infrastructure connectivity; as a result, infrastructure investment will gradually spread to countries and regions beyond Asia. In the middle and long term, it will help its developing members enhance their capacity of financing in the capital market and support development of their local bond markets to improve their infrastructure investing and financing levels. Moreover, the first batch of investment projects of the Silk Road Fund have been formally launched and$5.3 billion has been appropriated for investment in those projects.

Apart from development financial institutions, commercial financial institutions have also played an active role in implementation of the Belt and Road Initiative. The Bank of China has put forward the idea of building a “main financial artery” for the Belt and Road Initiative and provided various types of loans worth nearly $60 billion for countries along the Belt and Road routes in the past two years. In June 2015, Bank of China successuflly issued$4 billion of worth Belt and Road bonds. Denominated in four currencies, including renminbi, the US dollar, euro and Singapore dollar, and with multiple maturities ranging from two to 15 years, the bonds were issued in five overseas branches of the bank in five countries along the Belt and Road routes. Funds pooled from the issuance are mainly used to support Belt and Road construction projects.

While pushing forward the Belt and Road Initiative, China has actively promoted cross-border use of Renminbi. The People's Bank of China has signed memorandums with monetary authorities in 23 countries and regions on cooperation in Renminbi settlement arrangements and appointments of local banks for Renminbi settlement. The Renminbi offshore markets will further expand and the types of relevant products will continually increase;the Renminbi-related business will become a new growth point of financial institutions and help to create a new, convenient and efficient investment and financing channel.

3.5 People-to-people bond

People-to-people bond refers to strengthening of friendly exchanges and mutual understanding by people of countries along the Belt and Road routes. The ancient Silk Road served as a link connecting different peoples and civilizations. As early as in Tang Dynasty (AD 618-907), the Chang'an city and Luoyang city at the eastern end of the Silk Road had become a hub for cultural exchange between the Han people and those from the western regions. Western-style clothes, customs, food, and music became a fashion among both ordinary people and those in the royal palace. In the Song Dynasty (AD 960-1279), large amounts of China's tea and silk products were shipped to Europe. In the Yuan Danysty (AD 1271-1368), China's printing technology and powder were spread to Europe through the Silk Road, while astronomy, mathimatics, medicine and architecture were spread to China from Europe and the Arab world.

Today, people-to-people bond has become more frequent and diversified. Cultural exchanges, media cooperation, training of professionals, academic and think tank interactions, youth and women exchanges, and volunteer services are all effective channels for promoting people-to-people bond. In 2014, China, Kazakhstan and Kyrgyzstan successfully had a stretch of the ancient Silk Road, named “Silk Roads: the Routes Network of Chang'an-Tianshan Corridor” included in the UNESCO World Heritage Sites list. In April 2015, the Belt and Road Think Tank Association, initiated by the International Liaison Department of the Central Committee of the CPC, was launched. In July 2016, the first Belt and Road Media Cooperation Forum, organized by the People's Daily,was held in Beijing.In September 2016,the first Silk Road International Cultural Expo was held in Gansu province, China.

In the Vision and Actions, people-to-people bond has been put together with policy communication, facility connectivity, unimpeded trade, and financial integration to become the main priorities of cooperation among the concerned countries. Mutual understanding and trust should be strengthened through widespread human communications and the concept of “joint building community of shared destiny” and “promoting well-being of people in countries along the Belt and Road routes” should be spreaded to gain support from people in countries along the routes. Opportunities should be provided for people to better understand the value of various civilizations and the humanistic spirit of “appreciate the culture and values of others as do to one's own, and the world will become a harmonious whole” should be cultivated so that the Belt and Road Initiative can become a program that tolerates different civilizations, helps different civilizations learn from each other and creates opportunities for promoting exchanges among different civilizations.