Depth report

　　

In the era of frequent occurrence of black swans and gray rhinos, the "Belt and Road" has added a touch of brightness and certainty, that is, the certainty of China's full opening to the outside world, the certainty of China's full integration into the international community, and the certainty of China's firm participation in global governance. Judging whether the "Belt and Road" is an opportunity or a trap depends on its connotation and essence, that is, how to position the "Belt and Road". The philosophy, economics, and international relations of the strategy are based on connectivity. It is necessary to get through the pain points of development. Also look up to the high point of humanities. Today, the international community needs interconnection. Half a century or a century later, interconnection is still needed. The early construction of the “Belt and Road” requires infrastructure connectivity, unimpeded trade, and financial connectivity. Long-term construction requires policy communication and people-to-people connectivity.

      Recently, after the 19th National Congress of the Communist Party of China, the author visited three European countries—the Netherlands, the Czech Republic, and Austria. All three countries have paid close attention to the “Belt and Road” initiative. The impact of China's opportunities on Europe, especially Central and Eastern Europe, is solidly apparent. For example, in 2012, there were only 30,000 Chinese tourists to the Czech Republic. By 2017, the number of Chinese tourists to the Czech Republic reached 500,000. However, during my visit, the author saw a report from the Sankei Shimbun on November 28, 2017. In a speech, US Secretary of State Tillerson (Rex Tillerson) pointed out that the Chinese government is fully participating in the foundation of the Pacific and Indian Ocean countries. The construction of facilities is far more harmful than benefits for these countries. In his eyes, the "One Belt One Road" trap has two meanings: debt risk and employment risk.

Debt risk

    Tillerson pointed out that China's investment to obtain infrastructure projects will result in huge debts for the recipient countries. Analyzing from the investment contract, Tillerson also emphasized that the invested country can easily fall into the predicament of non-fulfillment of debt. Southeast Asian countries should still use the United States as the core and unite to fight China's strong "One Belt One Road" strategy, which cannot be controlled by China's huge funds.

      In the early days, infrastructure interconnection was a priority area of the “Belt and Road”. Important infrastructure projects usually required billions or tens of billions of dollars in investment, and the investment cycle was long. Central enterprises or state-owned enterprises were the main force. Such projects often require the participation of multiple parties or countries. China's domestic banks or banks in the project country cannot meet this demand in terms of capital scale and service capabilities. Therefore, they need to discuss, build and share together. In the past four years, on the one hand, the Chinese government has promoted the construction of financing platforms such as the Asian Infrastructure Investment Bank and the Silk Road Fund; on the other hand, it has actively encouraged the BOT-based PPP model and adhered to the main body and market orientation of enterprises. At the same time, the “Belt and Road Initiative” is paying more and more attention to asset-light projects that can play the role of soft connectivity. The subjects of these projects are often private enterprises and multinational companies.

      For many countries, the key issue is not debt risk but not even the necessary infrastructure. For example, Laos is located in the transportation hub of the Indochina Peninsula, but the country's transportation is very inconvenient. There is only one 3.5-kilometer-long railway in the country, which was opened to traffic in 2009. Under the framework of the “Belt and Road”, the construction of a 420-kilometer China-Laos railway is underway, carrying the dream of Laos’ transformation from a “land-locked country” to a “land-linked country”. After completion, it will greatly improve the country's transportation efficiency and facilitation level, and promote economic development and social progress.

    The China-Laos railway project is expected to have a total investment of 7 billion U.S. dollars, equivalent to about 40 billion yuan. It will be jointly constructed by China and Laos at a 70% and 30% share ratio. The China-Laos railway is the first Chinese-based investment and construction and joint operation. And overseas railway projects that are directly connected to China's railway network. In terms of investment and financing arrangements, there have been questions about the total investment of 7 billion US dollars, which is more than half of Laos’s annual GDP. It is believed that the China-Laos high-speed rail brings high debt to Laos because it only sees a total investment of 7 billion U.S. dollars, and the China-Laos railway is jointly constructed by China and Laos at a 7:3 share ratio. Laos needs to bear only the total investment. 30% of the amount is US$2.1 billion. And for financing, China has given Laos sufficient preferential policies. First of all, the Export-Import Bank of China agreed to provide 30-year low-interest loans. The total amount Laos needs to bear is 2.1 billion US dollars, excluding interest. Based on the 30-year repayment period, it only needs to repay US$70 million per year. In addition, China and Laos agreed to "resources for capital" and Laos mainly provides potash to China.

      Generally speaking, with regard to the investment and financing of the “Belt and Road” projects, China adheres to “One Country, One Policy” and measures measures to local conditions. For example, for the China-Thailand Railway, the Thai side independently finances itself. In the course of practice, in the construction of the “Belt and Road” project, China adheres to the orientation of economic and social benefits, and strictly prevents the creation of new debt risks and financial burdens on the project countries.

Employment risk

    As China increases its foreign investment, the United States and other Western countries are becoming more vigilant towards China. Tillerson believes that when China invests in overseas infrastructure projects, it is not keen to hire local residents. Instead, a large amount of Chinese labor is exported to the local area to alleviate China's very serious unemployment problem. Therefore, the cooperation between infrastructure projects and China does not play a good role in increasing local employment.

    From a theoretical analysis, the potential for job creation in the infrastructure sector is very obvious. Studies have shown that every 1 billion US dollars of infrastructure investment will bring about 13,000 to 22,000 jobs, and the potential for job creation in developing countries will be greater. In addition, Chinese companies are also changing their understanding of social responsibility. In the past, many companies overseas believed that having projects, pollution-free, and paying taxes is fulfilling their social responsibilities, but now more and more Chinese companies understand that to solve the local employment problem, that is, to achieve full “localization” (in where, for where). For example, since COSCO SHIPPING Group took over the container business of Piraeus Port in Greece, instead of dismissing workers without reason, it has directly provided and created more than 2,600 jobs and indirectly provided and created more than 8,000 jobs. The debt crisis hit Greece severely, and the company and shops closed one after another. However, the shops near COSCO SHIPPING Piraeus Port Container Terminal Co., Ltd. and the company’s partners became exceptions: not only did they not close, but the business was getting more and more. Prosperous.

    Permanent employment must not only solve the wage problem, but also the skill problem. The Sihanoukville Special Economic Zone in Cambodia is an overseas economic and trade cooperation zone jointly constructed by Hongdou Group and other Chinese enterprises in conjunction with a Cambodian enterprise. The author went to the park in June 2016 to investigate. At that time, 102 companies from China, Europe, America, Japan, South Korea and other countries and regions had been introduced into the park, of which 84 had been in production and operation, with 16,000 employees. The Westport Special Zone has created several "firsts": the largest special economic zone approved by the Cambodian government; the best-developed special economic zone with the largest number of employed people in Sihanoukville; the first special economic zone that unites Chinese universities to train overseas students. Hongdou Group organized Chinese university students to teach Chinese free of charge, subsidized outstanding Cambodian youths to study at Hongdou University and Wuxi Commercial College; and jointly established the Xigang Special Zone Training Center with Wuxi Commercial College, which has trained 23,000 local workers so far.

    It can be seen that the employment dividend of the “Belt and Road” initiative is real. As of the end of 2016, Chinese companies had established 56 cooperation zones in the Belt and Road countries, with more than 1,000 companies entering the zone, with a total output value of more than 50 billion U.S. dollars, and more than 1.1 billion U.S. dollars in taxes and fees paid to the host country, creating more than 18 local jobs. Ten thousand.

Split Europe risk

    When visiting Europe, I often hear the phrase "one Europe, two speeds". The attitudes of Central and Southern European countries towards European integration are relatively slow, and there is a huge gap with traditional Europe. However, China's increased investment in these two regions has led to an increase in the centrifugal tendency of relevant countries towards European integration, "two speeds." Begin to tear Europe apart.

    When the author was in Austria, it coincided with the visit of Chinese Premier Li Keqiang to Hungary to attend the 6th China-CEEC Leaders’ Meeting. At that time, some European media reports pointed out that China is continuously increasing its investment in Central and Eastern Europe, which will be of great significance for the "penetration" of Chinese forces into Europe. Both the United States and the European Union are very worried about this move by China. The European Union is worried that China's massive participation in the infrastructure construction of Central and Eastern European countries will split the originally unstable alliance foundation between Central and Eastern Europe and Western Europe, which will sharply increase China's influence in Europe. Western European countries cannot tolerate this trend, and conflicts with China may increase.

    The German "Süddeutsche Zeitung" reported in an article entitled "China-Central and Eastern European Leaders' Meeting: China Makes Eastern Europe Obey" on November 28, saying that China pledged 3 billion yuan at the sixth China-Central and Eastern European Leaders Summit. The investment in RMB is actually a move with ulterior motives and is also taking advantage of the EU’s weaknesses. The EU should unite to face China.

    If Europe tends to be divided, the source of the problem is Europe itself, not China. In fact, Europe has never been one. The EU has 28 countries, the Eurozone is 19 countries, and the Schengen member states are 26 countries. The internal mechanism arrangements are extremely complicated. If the EU has a "consensus": then this consensus is the lack of consensus among EU member states, and there is no unified voice and position. In addition, since 2008, the European crisis has gone through several stages: from the national debt crisis to the crisis in US-Europe relations, to the refugee crisis, to the referendum crisis (Brexit referendum, Scottish independence referendum, Spain Catalonia independence referendum, etc.) , European values edifices are in constant turmoil. Some European elites believe that the ultra-right forces will eventually split Europe. The internal reason is that the ultra-right forces of various countries have rarely interacted, but now this force's transnational and transcontinental linkages are greatly enhanced.

      Finally, from a global perspective, China has made up for the governance deficit in the United States and Europe since the 2008 financial crisis through the “Belt and Road” initiative. In August 2017, a McKinsey research report pointed out that since the financial crisis, global cross-border capital flows have shrunk by 65%. In an era of "de-globalization", old-brand capitalist countries no longer go to the world to invest generously as before, but have put forward the slogan of "XX priority". Domestic workers and employment are more important than overseas investment. The power of foreign investment by developed countries has stalled.

    In recent years, the scale of foreign investment by developed countries has fallen from US$1.8 trillion to nearly US$1 trillion, while the scale of China’s foreign direct investment has been increasing day by day. Therefore, the "Belt and Road" not only has economic functions, but also peace and security functions. Finance is the bloodline of the economy. The deterioration of financial liquidity has led to weakening of the economic stickiness of various countries and greatly enhanced strategic mutual suspicion.