Chinese economic indicators stable, indicating further growth in 2019

As a number of reports (here and here) indicate, China’s economic situation is stable and set to grow at over 6 percent in the rest of 2019. One example: as this report from the always reliable Xinhua News (via the People’s Daily) indicates, the foreign trade figures are very good indeed. Obviously, the BRI and AIIB are major factors, as well as the inherent strength of the Chinese socialist market economy.

BEIJING, June 10 (Xinhua) — China’s foreign trade registered steady growth in the first five months this year despite growing external uncertainties.

The country’s foreign trade of goods rose 4.1 percent year on year in the first five months of this year to 12.1 trillion yuan (about 1.76 trillion U.S. dollars), data from the General Administration of Customs (GAC) showed Monday.

Exports increased 6.1 percent year on year to 6.5 trillion yuan during this period, while imports grew 1.8 percent to 5.6 trillion yuan, resulting in a trade surplus of 893.36 billion yuan.

In May alone, the country’s exports and imports totaled 2.59 trillion yuan, up 2.9 percent from one year earlier.

Li Kuiwen, director of the GAC’s statistics and analysis department, said although faced with the slowdown of global economic growth and international trade, the Chinese economy has continued an overall stable upward trend.

The fundamentals of China’s economy, in that it is resilient and full of potentials, have not changed either, he added.

Government policies aimed at stabilizing foreign trade and investment as well as the improving business environment have also laid a solid foundation for the steady growth of China’s foreign trade, he said.

Zhuang Rui, deputy head of Institute of International Economy with the University of International Business and Economics, called the trade reading a “hard-won” result amid sluggish trade growth around the globe.

Last week, the World Bank revised down its forecast for global trade growth in 2019 by a full percentage point to 2.6 percent, the weakest since the global financial crisis, citing growing trade tensions, among other factors.

Monday’s GAC data also showed China’s trade with the European Union surged 11.7 percent year on year in the first five months, while trade with the ASEAN was up 9.4 percent.

As cooperation between countries participating in the Belt and Road Initiative keeps strengthening, China’s trade with Belt and Road countries increased 9 percent year on year during the period, with the pace of growth 4.9 percentage points higher than the overall pace.

Benefiting from the prosperous cooperation under the initiative, bilateral trade volume between China and Belt and Road countries accounted for 28.8 percent of China’s total trade volume, up 1.3 percentage points from the same period last year, the GAC data showed.

China’s private businesses reported faster trade growth in the first five months. Their trade volume increased 11.1 percent to 5.02 trillion yuan, accounting for 41.4 percent of the total trade volume in the period, up 2.6 percentage points year on year.

 

 

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The Silk Road is active again: Thousands of trains now run the route

Many centuries ago, the routes of the ‘Silk Road’ used camels and whatnot for covering the thousands of kilometres between east and west on the Eurasian landmass. In more recent times, when Chinese planners were thinking about the reincarnation of the Silk Road – what is now known as the Belt and Road Initiative (BRI) – they took into consideration a number of factors: trains, even slower ones, are faster than ships; the US navy likes to bully others on the high seas; Central Asia, Russia and Europe will become more and more keen on Chinese products as the latter move to high quality production. One of the key solutions was actually a relatively old one: trains.

I am a great lover of trains, taking them whenever possible. And China is now the world leader in train innovation, technology and implementation. But the development of long distance cargo trains on the Eurasian landmass has largely gone under the radar. From a modest beginning back in 2011, when the first cargo train left Chongqing in China for Duisburg in Germany, it was the beginning of a monumental shift. Back then, there were perhaps a couple of routes trains could follow. Now there are many indeed and they keep increasing exponentially.

Every few days in the Chinese newspapers (for example, here and here), I read of yet another service that has opened, so much so that now there are now 65 routes between 48 cities in China and 40 in Europe. For example, in 2108 alone, 6300 trains with cargo made the journey to Europe, an incease of 70 percent from the previous year.

More detail in this recent article from Xinhua News, the largest and most reliable news service in the world:

URUMQI, April 9 (Xinhua) — The freight train service linking Chinese cities with Europe are breathing new life into the ancient Silk Road with its rapidly expanding network.

In May 2011, a rail route was opened between Chongqing and Duisburg in Germany, marking the start of the China-Europe cargo train service.

Boosted by the Belt and Road construction, the international train service has been expanding fast over the past eight years.

A total of 48 Chinese cities have launched 65 freight train routes, reaching 14 countries and more than 40 cities in Europe in 2018. Over 13,000 trips have been conducted by the China-Europe trains as of March.

Nan Jun, deputy general manager of the Xinjiang Xintie International Logistics Company, operator of Urumqi China-Europe train logistics center, has been a witness to the development of the train service, as 70 percent of the China-Europe trains exit or enter China through Xinjiang.

According to Nan, when the logistics center was opened in May 2016, only four international lines were available, with trains operating once per week. Now there are 21 international lines, with at least three trains operating daily.

International trains starting from Urumqi can reach destinations in Kazakstan in 48 hours, Uzbekistan and Tajikistan in 72 hours, Russia in eight days, the Netherlands in 16 days and Italy in 19 days.

Cargoes traveling on the China-Europe rail routes have also been expanding in categories, from electronics and grocery products initially to some 200 categories including mechanics, chemical products, textiles and foods.

Local products in Xinjiang have also caught these trains heading for Europe. For example, locally produced tomato ketchup has arrived at the dinner tables of Italians, thanks to the train service.

The Alataw Pass and Horgos of Xinjiang are the two ports through which the trains enter or exit China.

Wang Chuanjie, head of the Alataw Pass Customs, said the port now sees an average of seven international trains passing through it every day, compared to only one every month several years ago.

Staff at the two ports have been working to improve customs clearance efficiency for the trains, from 24 hours previously to less than 14 hours.

Ning Jizhe, deputy director of the National Development and Reform Commission, said earlier this year that more places would be connected by the China-Europe trains.

China will continue promoting the commercialization of the trains and upgrade the trains with digital technologies, he said.

Deng Xiaoping: Basic principles of international engagement

In the context of the 1978 launch the ‘four modernisations’ (agriculture, industry, science and technology, and national defence), Deng Xiaoping made the following remarks relating to China’s international engagement:

At present, we are still a relatively poor nation. It is impossible for us to undertake many international proletarian obligations, so our contributions remain small. However, once we have accomplished the four modernizations and the national economy has expanded, our contributions to mankind, and especially to the Third World, will be greater. As a socialist country, China shall always belong to the Third World and shall never seek hegemony. This idea is understandable because China is still quite poor, and is therefore a Third World country in the real sense of the term. The question is whether or not China will practise hegemony when it becomes more developed in the future. My friends, you are younger than I, so you will be able to see for yourselves what happens at that time. If it remains a socialist country, China will not practise hegemony and it will still belong to the Third World. Should China become arrogant, however, act like an overlord and give orders to the world, it would no longer be considered a Third World country. Indeed, it would cease to be a socialist country. I first addressed these points in a speech delivered at the Special Session of the United Nations General Assembly in 1974. The current foreign policy, which was formulated by Chairman Mao Zedong and Premier Zhou Enlai, will be passed on to our descendants (Selected Works, vol. 2, p. 123).

Fast forward to 2017 and the official launch of the Belt and Road Initiative, where Xi Jinping reiterated the five core principles of peaceful coexistence, which date back to 1954:

China will enhance friendship and cooperation with all countries involved in the Belt and Road Initiative on the basis of the Five Principles of Peaceful Co-existence. We are ready to share practices of development with other countries, but we have no intention to interfere in other countries’ internal affairs, export our own social system and model of development, or impose our own will on others. In pursuing the Belt and Road Initiative, we will not resort to outdated geopolitical maneuvering. What we hope to achieve is a new model of win-win cooperation.

In light of Deng Xiaoping’s comments, China is obviously still a socialist country, if not even more so today.

Western aid model takes on Chinese characteristics (updated)

It seems as though the ‘Western’ aid model is suddenly being reset, as the article below indicates. Instead of the long-standing method of bribery, in which cash was handed over subject to social, political and economic changes in the recipient country, they are now starting to fund infrastructure. Who would have thought? This is starting to draw near to the Chinese approach, with one caveat: ‘Western’ countries still need to learn that they cannot interfere with the sovereignty of other countries. Of course, they have seen how well the Chinese approach works and that it is favoured by the majority of countries around the world (wherever you look a Chinese infrastructure project is underway). But these ‘Western’ countries still have a very long way to go.

This is a recent article on the topic from The Global Times (another item also welcomes the USA’s engagement in infrastructure projects, but also asks whether that weird country will actually deliver):

Australia recently announced plans to set up a A$2 billion ($1.4 billion) infrastructure aid fund for South Pacific nations, which will provide grants and long-term loans to support energy, transport, water and telecommunications projects in the region.

Further, Australia’s export credit agency – Export Finance and Insurance Corp – announced it will offer another A$1 billion to support infrastructure projects and business development in the South Pacific region.

These moves were quickly interpreted by some Western media outlets as a response to “counter China’s growing influence” in the region.

Yet, compared with Australia’s previous attitude toward South Pacific issues, and given the adjustments made by developed countries to their foreign aid, it seems that China’s aid model of respecting recipient countries’ willingness to develop independently has been widely recognized by developing countries. This recognition has also gradually influenced the traditional Western aid system.

Australia’s latest aid plan is in sharp contrast with the comments it made several months ago. In January, Concetta Fierravanti-Wells, the-then minister for international development and the Pacific, told reporters that China was funding unneeded infrastructure projects in the South Pacific, which led to “useless buildings” and “roads to nowhere.”

In April, Julie Bishop, Australia’s former foreign minister, said that her country didn’t want to see development aid turn into a burden on vulnerable economies. Using this logic, it seems contradictory for the country to change its practice of only providing grants while starting to offer long-term loans to South Pacific nations. Australia’s moves are not merely intended to react to geopolitical competition, but also to fulfill the demand of recipient countries.

The policies and practices adopted by countries of the Development Assistance Committee (DAC) of the Organization for Economic Co-operation and Development (OECD) have expanded to include what look like Chinese characteristics.

First, OECD/DAC countries have expanded the scope of development aid from projects meant to improve living standards (for example, education) to infrastructure investment. Western donor countries usually limit their foreign aid on non-production sectors, avoiding industrial projects that might pose competition to their own industries. But this deprives recipient countries of the ability to develop independently and leads to their long-term economic dependence on donor countries.

In comparison, China-funded infrastructure, such as roads, bridges and factories, has enhanced the connection between recipient countries and the world market, thus winning them recognition and prompt Western countries to pay attention to the infrastructure aid they criticized before.

Second, OECD/DAC countries have evolved from offering free aid as they did in the past to a model of providing “grants plus loans.” Since the end of the Cold War, Western countries have attached reform conditions to their financial aid.

Countries that moved toward the reform targets set by the West could get direct cash transfers, which led to excessive dependence of the recipient countries. For this reason, Western countries have to learn from China’s experience to offer preferential loans, so as to push recipient countries to take more responsibility for their own development.

Third, China’s model of respecting recipient countries’ willingness to develop independently has caused some observers to criticize and reflect on the Western development aid model. When drawing up its foreign aid strategy, China fully respects the autonomy of recipient countries in formulating and implementing their own development strategies.

Based on a detailed understanding of the development needs of each recipient country, China revises its foreign aid development plan every five years, making systematic arrangements for medium- and long-term foreign aid targets, the scale of investment, capital structure, key areas and safeguards. Aid guidelines of these countries are also formulated every five years to develop specific foreign aid policies that suit the recipient countries’ economic and social development plans.

During the preparation and implementation of aid projects, China also communicates closely with all interested parties in recipient countries to gain a full understanding of their development needs. In contrast, Western countries have long neglected recipient countries’ demand for independent development, and they have attached political conditions to aid, violating the principles of political and economic development.

Beijing’s foreign aid concepts have been different from those of the West from the start, because of China’s semi-colonial experience, its identity as a developing country and its independent, self-driven development.

Since reform and opening-up began in the 1970s, top Chinese officials have repeatedly said that China will respect the independent development of recipient countries in its foreign aid program, without attaching political conditions to its aid. This aid model has won wide recognition among developing countries, and it has also put the development of the Western-led global governance model on a path with more justice and rationality.

What if Africa became a global economic powerhouse?

Those accustomed to calling the shots in the world – many of them former colonial exploiters – may be struggling with the reality of China’s rejunevation. But what if Africa too became a global economic powerhouse? For many, this is imply unimaginable.

Guess what? The foundations are being laid, and have been laid now for almost two decades. Not that too many have been paying attention outside Africa and China, at least until now. Indeed, it has been primarily through Chinese involvement, especially in infrastructure (now a key compenent of the Belt and Road Initiative).

The Chinese papers are full of stories, summing up the history thus far, providing case studies, showing the multiple levels of cooperation. All of this is part of the build-up for the major Forum on China-Africa Cooperation, to be held in September. It will be the largest such gathering thus far.

 

 

The Chinese Model: A different approach to engaging with Africa

This insightful article was published recently in The Global Times. It is written by He Wenping, a senior research fellow at the Charhar Institute in China, and by Hisham Abu Bakr Metwally, an economic researcher at the Central Department for Export and Import Policy under the Egyptian Ministry of Foreign Trade and Industry.

It’s time for Europe to learn from China in engaging in Africa

The just-concluded EU Summit on migration has come up with measures like securing centers for migrants to process asylum claims, strengthening external border controls, and boosting financing for Turkey and countries in North Africa. But these are old solutions to old problems.

Since 2015, the EU has been working at full capacity to overcome the migration crisis. EU member states received over 1.2 million first-time asylum applications in 2015, more than double that of the previous year. But it seems that the European continent is still working in the same old way to try to prevent the entry of immigrants and not to address the causes of migration. Even if we assume these measures bring success in reducing immigration for some time, the EU will later be surprised when migrants use other means and methods to migrate, because the causes of migration still exist.

The root of migration is poverty. The African continent has suffered occupation and war for many decades. Many African countries have not yet been able to achieve the path of reform and development. This has put the people of these countries under unbearable pressure from poverty, ignorance and disease. They have pushed themselves into the abyss and tried to cross the border to reach Europe. They have faced danger and horror, believing a chance at a better future is worth dying for, if necessary.

With the emergence of the new system of globalization, the world became a small village and Africans opened their eyes to the luxury and good life enjoyed by Europeans, which inspired them to move to these countries. The majority of people from African countries continue to blame European countries for their backwardness and believe they should shoulder their responsibilities toward Africa. As a result of the failure of European countries to play the role that the African people were waiting for, these masses migrated to Europe to try to gain these rights. Europe, when dealing with refugees, looks at them from a perspective of human logic or empathy and does not view migration as a symptom of a disease. European countries must change their thinking and strategy to deal with the disease in order to make the causes of migration disappear.

It is time for Europe to look at the Chinese experience in Africa. The Chinese policy has always focused on development. Economic relations between Africa and China have grown enormously, especially since 2006. The African continent is playing an important role in the Belt and Road initiative. China provides infrastructure funding and a workforce, and this infrastructure allows Africa to increase its production and exports, improving the quality of life and improving the conditions of millions of Africans.

Hope is the solution. The people of the African continent need hope. At least this last summit has come out with some words about more investment in Africa to help the continent achieve a substantial socio-economic transformation. China has been focusing on African development for a long time and has seen the results. The EU should work closely with China to push for the B&R to fight poverty in Africa and promote development.

He Wenping is a senior research fellow at the Charhar Institute in China, and Hisham Abu Bakr Metwally is the first economist researcher at the Central Department for Export & Import Policy under the Egyptian Ministry of Foreign Trade and Industry.

The Origins of the Belt and Road Initiative

A mountain cannot turn, but a road can (shan bu zhuan lu zhuan).

So goes an old Chinese saying.

And another: A friend made is a road paved; an enemy created is a wall built (jiaoge pengyou duo tiao lu, shuge diren duo du qiang)

I have begun with these sayings, since they indicate how the Belt and Road Initiative (BRI) arises from Chinese tradition and culture. But this is not all, for it also emerges from Chinese socialism. Both are relevant in a creative interaction.

Before explaining, it is worth noting how others perceive the BRI. As the worldwide project became evident and as it was officially launched in 2016, some began deploying old categories, derived from Europe. ‘Creditor colonialism’ is one, first coined in India, where British colonialism has left a deep and lasting impression. That is, a piece of infrastructure is built in a country, with a long-term debt incurred. More generally, some have suggested that the Belt and Road Initiative is just another form of colonialism per se, in which China is seeking to influence and dominate more and more places throughout the world. On this matter, it is worth recalling an old (Danish) saying: a thief always thinks everyone else is a thief. In other words, if one comes from a background of international colonialism, then one views the activities of others in the same light.

All of this is quite unhelpful, so let us try another angle or two. The first concerns Chinese tradition and culture, which can be somewhat two-edged. The key example concerns the expeditions of the mariner, Zheng He, in the fifteenth century. His fleets set out with ships equipped to use the monsoonal winds to their advantage, voyaging to all corners of the China seas, if not further afield. Importantly, his ships were not festooned with guns – as European ships were not so long afterwards – but with treasure. The idea was to give this treasure as gifts to all that he would meet. On a more negative side, this approach entails an assumption that one’s own culture is superior. Thus, gifts for those less advanced was the best approach. On the positive side, it meant that he came offering gifts, not pointing guns. Zheng He’s voyages ended too soon, subject to the vagaries of the court in Beijing, and not long afterwards Dutch ships would appear in China’s part of world, full of cannon and the search for financial gain in areas they could colonise.

What has all this got to with roads and belts? Let us go further, recalling the sayings I quoted earlier. A road turns, it can find a way through. It enables one to meet and make friends, so much so that a new friend is like a paved road. In China, where I spend a good deal of my time, the poverty alleviation campaign – focused on lifting the last 40 million people (850 million so far since 1978) – has as one of its main concentrations the building of road and rail to remote areas. A significant reason for poverty is that some people live in inaccessible areas. These areas may be mountainous, they may be distant from regional centres. Build a good road, a major bridge, a high-speed rail link, and one finds access to the wider world and the opportunities in provides.

Let me give one example. Recently, I travelled from Kunming, the capital of Yunnan province in the far south of China, to Beijing. The whole distance is 2600 kilometres. Although I have a love for older and slower trains, I took the high-speed rail line (gaotie). It travels at 310 km per hour in full flight. Through Yunnan and the neighbouring Guizhou province, it stopped at a number of regional stations, in the mountains and remoter areas. But once it joined the trunk line, it stopped at only provincial capitals. The whole journey took twelve hours, from the far south to Beijing, in the north. The train was full all the way. This experience can be replicated again and again throughout China, whether it is a winding mountain road to remote areas, or yet another rail link across the breadth of the country.

So much for roads (and rail), but what about belts? The crucial character for ‘belt’ is dai (带). This character has a rich semantic field indeed. Its basic sense is a belt or girdle, but it also connotes a range of meanings: a zone or area, and, as a verb, to take or bring, to bear or have something attached, to lead or teach, to look after and nurture, if not also to spur on. When this character is used, it invokes this rich range of meanings. Perhaps I can put it this way: when a lover – short-term or life-long – wishes to give an appropriate gift, he or she gives a belt. Why? A belt means intimacy, closeness and commitment.

One Belt, One Road, or, the Belt and Road Initiative, has a significant pedigree in Chinese tradition.

What about the Marxist tradition, especially as this has become interwoven with, and indeed transformed, Chinese culture? To understand this situation, we need to go back to none other than Stalin. There is a crucial phase in his thought (and consequent practice) that emerges especially in the turbulent and creative 1930s. This was the time when the ‘positive policy’ – or as some have called it, the ‘affirmative action’ program – in relation to minorities was first developed. They called them ‘nationalities’, a term I prefer (these days some like to call them ‘ethnic minorities’, but this designation has a host of problems). Given that the Soviet Union was the largest country in the world, it had many nationalities. Stalin sought to implement an old Bolshevik program: fostering the languages, cultures, education, political leadership and economic incentives of the many nationalities in the Soviet Union. It became the first and most advanced ‘affirmative action’ program in the world.

At a crucial moment, Stalin made a breakthrough: the model of ‘affirmative action’ within the Soviet Union also applied to colonised peoples throughout the world. In some respects, he argues, the Russian Revolution itself was an anti-colonial act, a freeing of a whole range of peoples from subservience to the colonial powers of Western Europe. But it also meant that the Soviet Union – as a ‘beacon’ and a ‘torch’ – would light the way to liberation from colonialism throughout the world. With this breakthrough, the Soviet Union began to foster anti-colonial struggles throughout the world. We find this taking place in Africa, Asia and Latin America. In this phase, the project entailed arms (think of the Kalashnikov), education, logistics, education, funds and more.

Two implications follow. First, this support was the transformation of the global communist revolution into a new phase, focusing on the peripheries of the ‘global world order’ rather than its centre, as had first been imagined. Second, this focus led to one of the greatest transformations of the twentieth century, apart from the Russian Revolution itself: the success of one anti-colonial struggle after another, the vast majority of them supported by the Soviet Union (although it also generated tensions between socialist states, with some – like Cuba – at times criticising Soviet involvement in Latin America). By the 1970s, the world did not look the same anymore.

The question remains: what has all this got to do with China?

In many respects, the Belt and Road Initiative is fostering a new phase of the anti-colonial struggle. This may seem like a surprising claim, so let me explain: in the wake of the twentieth-century’s success in throwing off the old colonial yoke, a new yoke was found. This involved ‘foreign aid’, rendering many of the former colonies financially dependent of the powers from whom they received this ‘aid’. The process was streamlined and globalised through organisations such as the World Bank, which would give loans with heavy conditions attached – all the way from neo-liberal economic and social ‘reforms’ to implicitly forcing ‘regime change’. Essentially, these loans comprised another form of bribery: cash handed over to a local ruling class to as to keep them compliant in the global hierarchy. In other words, it was not the exception but the rule that substantial wads of cash ended up in the pockets of the local ruling class. What better way to keep them on side?

As a result, nothing much was built, no infrastructure – crucial for any country’s economy and society – established. As someone from Romania put it to me: in rich countries, corruption happens, but schools, roads, rail and so on still get built; in poor countries, corruption happens and nothing is built.

This is where the Belt and Road Initiative offers a very different model, developed out of Chinese experience. Any country with an infrastructural need is potentially eligible. In Africa, Latin America, the Pacific, Asia, project after project is being built by Chinese companies. So also in countries regarded as financial pariahs within Europe, such as Greece or Serbia or Hungary. Even in Greenland, a Chinese company is in the final round of negotiations to build a new airport. Does China have an agenda? Of course, not least of which is enabling a shift from the ‘global world order’ that has dominated since the end of the Second World War. They prefer to call it a ‘global village’, without demanding changes to the internal structures of governance, economy and society. Why? The Chinese are keen indeed on sovereignty. In the same way that they make sure no other country interferes with their internal affairs, so also do they relate with other countries.

With all this focus on infrastructure, which neo-liberal economics typically finds a waste of money (as Marx already pointed in the third volume of Capital, why build something when you can speculate, making money form money?), China’s know-how has and continues to leap ahead. The signature example is high-speed trains. Initially, the Chinese drew on German and French expertise in order to build the ‘Harmony’ series of trains. But as they laid out thousands upon thousands of kilometres of track through deserts and soaring mountain ranges, and as they built hundreds and hundreds of trains, they developed the technology beyond what is found elsewhere. The new Fuxian train is the result, with longer life in its crucial parts, higher speed, smoother running and greater comfort. It travels the 2100 kilometres from Beijing to Guangzhou in eight hours. Crucially, the train was completely designed and constructed in China. This example could be replicated again and again. So when a Chinese company bids for an international infrastructure project, it is offering not cheap labour but the highest quality product.

To wrap up: I began with two Chinese sayings, so let me finish with another: Do not be afraid of a long road, but be afraid only of a shortage of aspiration (bupa luchang zhipa zhiduan).