China's Belt and Road (B&R) initiative could prompt a profound shift in the global order toward a new multilateralism. The strategic planning and delivery of scalable infrastructure for power generation, transport, water and telecommunications will bring much-needed economic and societal connectivity to all the countries along the route of the this new network.
The B&R initiative has five major goals within a broad framework of connectivity and collaboration: policy coordination; facilities' connectivity; unimpeded trade; financial integration; and people-to-people exchange.
In a narrower sense, the B&R initiative is primarily a strategic infrastructure initiative of historic proportions. Beyond the initial commitment by the Chinese government of about $1 trillion in infrastructure development, which conservative estimates believe to be viable, the B&R initiative will require roughly an aggregate of $6 trillion for the next 15 years to finance infrastructure projects fuelling the countries along the routes. During that period, China plans to cumulatively invest $4 trillion in total.
Some of the investments are already underway, such as various pipelines. For instance, a 3,666-kilometer gas pipeline between Turkmenistan and China is being built, requiring investment of $7.3 billion.
To unlock the initiative's full potential, a sensitive approach to infrastructure delivery will be required. A recent study by researchers at Oxford university found that low-quality infrastructure investments pose significant risks to the global economy. Therefore, we propose a framework that is able to put the focus on few but higher-quality infrastructure investments, improve China's project management track record, deliver positive risk-adjusted returns, and thus avoid overinvestment in unproductive projects, build-up of debt, monetary expansion, instability in financial markets, and economic fragility.
In the light of this initiative and building on the B&R's dimensions of connectivity highlighted above, we anticipate eight transformation factors that have the potential to provide high-level stewardship for the New Silk Road and revive the spirit of shared prosperity.
Shared vision: achieving transnational and international support for a shared vision for strategic infrastructure development that promotes well-being and a national sense of purpose to the communities beyond national borders.
Multilateralism: curating an open and multilateral policy dialogue that addresses public-private-civic cooperation, early-stage project financing, standardized procurement, and transparency to level the playing field and build trusting relationships.
Project-preparation facility: creating an infrastructure project-preparation facility to ensure a pipeline of bankable projects and a transnational center of excellence to deliver the largest portfolio of projects ever.
Risk mitigation: proactively mitigating political and regulatory risk to boost stakeholder engagement and confidence in the plan by investors and operators.
Sustainable development: committing to sustainability, inclusion and affordability principles to generate value for future generations.
Innovation: enhancing technological and business model innovation for sustained value creation, ensuring readiness for the future.
People-to-people exchange: governing domestic and cross-border migration and promoting mutual learning and understanding to enable and deepen people-to-people exchange and transnational cultural cooperation to ensure transcendent growth and universal purpose.
Human-centric and future-ready: delivering the new humane infrastructure heritage beyond the current infrastructure usage for the next millennium.
The B&R initiative has attracted a lot of attention. This may have something to do with the fact that today's increasing lack of global governance has resulted in the absence of international development plans that are comparable to the scope and vision of the initiative.
To date, the B&R initiative involves over 60 countries that account for 60 percent of the world's population and 33 percent of global GDP. With this initiative, China is willing to share its immense financial and industrial resources and capabilities as well as its own experience of four decades of reform and opening-up, and, at the same time, secure its own long-term development.
Thorsten Jelinek is director of the Europe Center at Taihe Institute, a Beijing-based think tank. The article was compiled based on a report released by the World Economic Forum. The entire paper was originally published at the World Economic Forum website and can be accessed here: http://www3.weforum.org/docs/WEF_Eight_Success_Factors_New_Silk_Road_2P_2017.pdf
