May 9, 2019
Belt-Road Initiative is Now Second Largest Trade Bloc
{Global Times} reports today that the BRI has become the second-largest trade bloc in the world, surpassing NAFTA, now second only to the EU. The BRI countries account for 13.4% of world trade, while the EU is about 20%.
In terms of investment, {Global Times} reports, the BRI countries have become the most important destinations for foreign capital inflows in the world, accounting for 31.6 percent of the total in 2017, exceeding the 23-percent share of NAFTA and the 21.2-percent share of the EU.
Vladimir Yakunin: BRI is “A Future Model of Global Development-in-Solidarity”
Vladimir Yakunin, the former president of Russian Railways and the initiator of the Dialogue of Civilizations (DOC — the Rhodes Conference), has posted an article on the DOC Research Institute website titled: “The Belt and Road Initiative as a new model for global inclusive development and solidarity.”
Yakunin writes that the Second Belt and Road Forum “should be seen to represent significant global development amidst uncertain times.” He reviews the decay of the world economy that led to the 2008 financial crisis, where investments in infrastructure were drastically curtailed, while “the world economy became `financialized;’ i.e., the financial sector increasingly dominated the real sector. This uncontrolled imbalance eventually led to the financial crisis and later to the global systemic crisis.”
The DOC, founded in 2012, took on an effort to develop “a new approach to under-standing the role of infrastructure projects in global development,” which was published as: “Trans-Eurasian Belt Development: RAZVITIE project,” and presented at a specially organized conference in Milan in November 2012.
The developments at the Second Belt and Road Conference this past week, Yakunin writes, “showed an increasingly widespread unders-tanding that economic egotism and arrogance is giving way to rational collectivism and an orientation towards a new type of globalization, based on principles of equality, sovereignty, and mutual development.”
Yakunin notes that some Western officials are worried that the BRI, together with the new financial institutions like the AIIB, the BRICS’s NDB, and the Silk Road Fund, are challenging their “long-time dominant positions,” but notes that “the traditional international development institutions did not provide the necessary weight for developing countries to participate in the global financial system.”
He reviews the huge growth in the BRI, such as the 73% increase in China-Europe freight trains in 2018 over 2017, with 6,363 trips in 2018, connecting 59 Chinese cities and 49 cities in 15 European countries.”
His conclusion: “[T]he key idea of the Belt and Road initiative — equal and mutually beneficial cooperation without imposing any political conditions — clearly contradicts the currently dominant thesis in contemporary world politics. The new approaches could change the very essence of geopolitics and geo-economics by altering the outdated Cold War mentality of the past. Geopolitical theory has always been articulated through a lens of conflict, dividing the world into `us’ and `them’…. “The Belt and Road Initiative could be the source of a future model of global development-in- solidarity. The key here is the inability to return to the concept of a uni-polar or bipolar world, which can be seen today in global trends towards development of a truly multilateral world.”
Excerpts below:
“SEARCHING FOR A NEW PARADIGM OF SOCIO-ECONOMIC DEVELOPMENT”
“Numerous studies conducted after the crisis demonstrated a positive correlation between investment in infrastructure and economic growth. Importantly, it was also shown that infrastructure projects play a positive role in short-term outcomes as well, due to their creation of new jobs and their development of local enterprises, which increase long-term regional development levels.[1] Another conclusion voiced by many prominent economists over the last ten years has been the necessity of developing a new economic model to replace the existing neo-liberal system because neo-liberalism no longer meets requirements. Such statements were difficult to imagine before the crisis, but now seem obvious”
“CHALLENGES ON THE PATH TO IMPLEMENTATION”
“Taking into account the scale of the Belt and Road Initiative and the amount of investment China put into it through the newly founded multilateral financial institutions like the Asian Infrastructure Investment Bank, the New Development Bank, and the Silk Road Fund, it is not surprising that major powers including the European Union and the US are expressing significant concerns.”