Depth report

　　

In March 2018, one of the hot topics discussed in China's "two sessions" was the prospects and problems of the "Belt and Road". So now, what is the ultimate goal of "One Belt One Road"? What is a community with a shared future for mankind? After achieving these two goals, what experience will it bring to the Chinese and the people of the countries along the route? Can they use specific words to describe the common welfare that they care about? For the above-mentioned questions, many of the answers we have seen are academic solutions. The political terminology is piled up, abstract and obscure, and it is difficult for ordinary people to understand the wit.

    In the final analysis, the ultimate goal of the "Belt and Road" is to increase national wealth, enough to enable people in China and countries along the route to lead a well-fed life. In short, everyone has money.

    How to obtain international currencies such as the US dollar or the euro to achieve the growth of national wealth? China’s experience has long proven that the way to obtain it is to develop trade relations with the United States and Europe within the existing international economic system, sell domestic products to Western markets, and strive for a trade surplus. Or opening the country and attracting international capital represented by the US dollar to invest in the country will also bring in foreign exchange. China has now accumulated more than US$3 trillion in foreign exchange reserves. The huge foreign exchange reserves and the status of the world's factory give the renminbi a strong support. With these two pillars, the renminbi is printed as money, while the currencies of countries along the route do not have this condition.

    However, everything has two sides, and everything has a degree. Soon the question came. First of all, the U.S. dollar and the euro can only be earned in the U.S. and European markets or collectively referred to as the Western international market, and only investment in Western capital markets can increase profits. Second, although China enjoys the reputation of the world’s factory, it can provide most of the low-end necessities and some high-end manufactured goods to the world market, but these products must be sold in the Western international market to realize the value of the product. Third, China's huge trade surplus with the United States and Europe has become a stumbling block to China's relations with the United States and Europe. Western politicians keep accusing China of mercantilism that has no bottom line. On the other hand, China sits on trillions of dollars in foreign exchange, but it is difficult to convert it into physical wealth in the international market. Western countries have various restrictions on China's trading activities. Most of the products on the western market are made in China. China has earned dollars, but cannot buy valuable items, so it has to buy U.S. bonds. The money is earned from the US market, but it is still stored in the US. As a result, China has become dependent on the West.

    This dependence has led to China's long-term implementation of an export-oriented development model, purchasing primary raw materials everywhere in the world, and providing sufficient market supply for the international market. While earning a large amount of foreign exchange, China also bears a lot of burdens, including a large amount of energy consumption, which causes environmental pollution; with the cyclical production crisis in the West, the domestic market cannot consume unsalable products, resulting in a large amount of overcapacity. Western countries enjoy the various benefits of the Chinese model. First, the purchasing power of the U.S. dollar is strongly endorsed; the second is to avoid energy consumption and environmental pollution; and the third is to pass on excess capacity. The United States, Europe, and Japan are unwilling to recognize China's market economy status, and they want to control the terminal links of the global value chain so that China's dependence on the West can be maintained for a long time.

    From this we have discovered a bug in China's economic model: Although it has a complete national economic system, it has no control over the terminal links of the global value chain and lacks a foothold. Without this foot, the value of Chinese products cannot be realized and converted into national wealth.

    However, it is very difficult to grasp the terminal links of the global value chain and control the source of national wealth growth. Because this terminal link is in European and American countries, it is protected by their sovereignty. Without huge impact and superb skills, Western countries are unwilling to share the control of wealth growth with China. For a big country like China, since it is unwilling to collide with the existing international economic order, but wants to get rid of its dependence on the Western international market, the more appropriate choice is to start anew. Bridge is no longer playing, let's play Go.

    According to the current actual situation, Chinese-style games can be played and played well. The name of the game is called "One Belt One Road". Since it is a game, always win or lose. The sign of winning or losing in the “Belt and Road” game is whether every country in this big family is rich and everyone is rich. Of course, this money does not refer to the local currency of the countries along the route, but refers to the international currency. However, the current international currency position is basically occupied by the US dollar and the euro. In the dollar era, the impoverishment of the countries along the route is a status quo that is difficult to change. Even if China becomes the second largest entity in the world economy, its economic lifeline is still beyond its control. Therefore, only by making the renminbi an international currency can China get rid of its dependent status and lead the countries along the route to get rich together and realize a well-off society.

    The possibility of RMB internationalization exists. There is an interesting phenomenon here. China's large amount of U.S. and European currency reserves are not used for shopping in the U.S. and European markets, but for the purchase of resource goods from countries along the route. Similarly, the U.S. dollars and euros of countries along the route are mainly used to purchase Chinese-produced goods in Western international markets. Why doesn't China conduct direct transactions with countries along the route? China uses renminbi to buy resource or non-resource products from countries along the route, and the renminbi earned by countries along the route from China directly purchases the necessities of life needed by the country in the Chinese market. Further inferring, when oil-producing countries along the route accept RMB to purchase oil and gas resources, it is questionable whether China will continue to maintain its huge foreign exchange reserves. If China's rigid demand for the U.S. dollar is reduced, the export-oriented model now implemented should also be adjusted. In the same way, after countries along the Belt and Road recognize the renminbi as a regional international currency, the focus of their economic cooperation will inevitably shift to China. Please note that this is not turning to the Chinese government, but to the Chinese market. After bypassing the Western market, China and the countries along the route will save a lot of money and get rid of the dependency trap that has plagued them for a long time.

    So, what does China need to do after economic transformation? Please get out the "Kure Market". The market economy is a decisive factor in the development of the “Belt and Road” initiative. Most of the countries along the route are developing countries and have not experienced a full market economy development process. Moreover, the history and status quo of the countries along the route are very different. To build a community with a shared future, the greatest common divisor must be sought. Under current conditions, this common divisor is the market economy. The market economy is the most efficient way of allocating resource elements in the history of mankind. In particular, if China wants the "Belt and Road" to form a community with a shared future, it must provide a platform for countries along the route. On this platform, the resource elements of the countries along the route can be optimally allocated, and the products of the countries along the route can realize exchange value, thereby realizing the growth of national wealth. This platform is called the "Belt and Road" international market.

    For China, the significance of the “Belt and Road” international market has the following points. First, provide a circulation platform for the internationalization of RMB. According to historical experience, the formation and circulation of international currencies must be based on the international market. The characteristics of the US dollar and the euro as international currencies are formed in the circulation of the US and European international markets. If the renminbi circulates in the international market of the “Belt and Road” and becomes a means of payment for China's trade with countries along the route, it will be a crucial step for China to become a world power. Although most of the countries along the route are poor, they are resource-rich countries. They have the natural resources needed for China's economic growth. Currently, most of China's foreign exchange is mainly used to purchase these natural resources. After the renminbi becomes a regional international currency, the renminbi can be used to purchase oil and gas resources in countries along the route. Then, China's rigid demand for the U.S. dollar and the euro will be greatly reduced. China does not need to accumulate large amounts of foreign exchange reserves, nor does it need to export large quantities of products to European and American markets. Whether or not Western countries recognize China's market economy status has become irrelevant.

    Second, it provides a strategic opportunity for the integration of the domestic market. The market is often associated with the population of consumers. China has a population of 1.3 billion, so people take it for granted that China is a big market. However, after entering the Chinese market, many foreign businessmen, especially small and medium-sized enterprises, find that they have entered the "Rashomon", and there does not seem to be a unified big market. . The domestic market is severely cut by administrative power, and fragmentation is serious. The domestic market is not integrated to form a unified big market, and the construction of the "Belt and Road" international market is impossible, because it is built on the basis of the Chinese market. It is the logical deduction result of the opening of China's big market to countries along the route, and the market elements of the countries along the route participate in market circulation and market exchange within China. In the integration of the domestic market, it is imperative to change the phenomenon of multiple political parties and separate efforts. The advanced stage of the big market emphasizes market order and pays attention to standard brands. Only in this way can it attract market actors from countries along the route to participate in market competition. The only metropolitan areas in China that have the ability to withstand the core area of the "Belt and Road" international market are Shanghai and its surrounding areas. The markets of the countries along the route have almost always been optimistic about Shanghai. The domestic market should be integrated around Shanghai and the Yangtze River Delta, and market elements scattered throughout the country should be aggregated to create a siphon effect. When the economic energy of the Shanghai market is highly condensed, it will inevitably produce spillover effects, spreading to surrounding areas, to all parts of the country, and to countries along the route. But at this time, the trajectory of economic energy exchange is orderly and conforms to the laws of the market.

    Third, it helps to form a regional international economic order, reduces the dependence of China and the countries along the route on Western economic centers, and enhances China's right to speak in the international economic order. From the Non-Aligned Movement to the Group of 77, from Stalin’s "Two Parallel Markets" theory to Deng Xiaoping’s change of the unjust international political order, in these years, no matter how China and developing countries call for and take initiatives, they cannot always change their attitude towards the West. The dependence of the dominant world system. where is the problem? After the above analysis, the answer is clear, because they have no international currency, no international market, and no right to speak in the international economic order. The "Belt and Road" international market is to change this situation. Through China's advocacy, countries along the route respond to the formation of a regional international currency, international market, and international economic order. For the whole world, this is a win-win outcome. The western economic system still dominates the world, is the core force of world economic development, and the main source of national wealth growth in all countries. However, any monopoly will produce corruption and injustice. For this reason, it is probably beyond reproach for China to take the lead with the participation of countries along the route to form a new regional economic order within its own region, avoid over-reliance on the Western system, and provide a reasonable choice for the country’s economic development. .

    Although no one believes that there is a cure for all diseases in the world, the ultimate goal is to improve the welfare of the people of China and the countries along the route, to increase their national wealth as the forward direction, and the "Belt and Road" international market as the implementation platform. It can indeed solve some of the problems facing the current "Belt and Road" advancement process. So what are the problems? Here we examine it from two perspectives. One is the problems found after logical derivation of existing policy plans; the other is the problems encountered in the practice of the “Belt and Road” initiative.

    In the early stage of the "Belt and Road" infrastructure projects, large-scale investment and construction will be carried out in countries along the route to achieve the purpose of exporting excess domestic production capacity in China and boosting the economic development of the countries along the route. To this end, relevant Chinese ministries and commissions have formulated six economic corridors and a policy plan with an annual investment of nearly one trillion U.S. dollars. According to statistics, China has invested nearly one trillion U.S. dollars in the construction of infrastructure projects in the “Belt and Road” initiative.

    The problem is coming right away. Although some domestic experts say that the capital needed for the infrastructure construction of the “Belt and Road” is not provided by China alone, it may be a crowdfunding model. However, the rich are all developed countries. Are they willing to invest in the projects China advocates? Furthermore, even if developed countries invest in projects in countries along the route, can these projects be counted as "One Belt One Road"? Next, I have to ask, after receiving China's huge amount of credit for infrastructure construction, what will the countries along the route take to repay it? Although countries along the Belt and Road only need national sovereignty guarantees to obtain loans, they are in debt, owed, and life is difficult, and they cannot repay their debts. Where is the country’s face? What's more, these infrastructure projects are not urgently needed for the people's livelihood. They can neither solve the product sales of the countries along the route nor solve the unemployment rate problem. Any country with a brain and responsibility will think twice.

    In all fairness, the launch of the “Belt and Road” initiative is remarkable. In a short period of time, dozens of countries have responded and participated, and some large projects have also been implemented. But over time, the problem began to be exposed.

    On the other hand, according to the current development mode, can China solve its own development plan through the "Belt and Road" plan? The Achilles heel of China's economic system is its path dependence on Western markets. The current "One Belt, One Road" approach has not fundamentally solved China's dependence on the Western international economic system, and even deepened this dependence to some extent. The common saying is that China wants to strengthen the economic ties between the Asian economic circle and the European economic circle, and speed up the delivery of Chinese goods to the European market through the construction of the Trans-Eurasia Economic Corridor. However, some factors are ignored: Chinese products are in the European market. Increasingly saturated; countries along the route are unprofitable in the trade between China and Europe; the process of Chinese products being transported to the European market is severely damaged, and domestic companies are also unprofitable. Basically, empty wagons are pulled back from Europe, so that many containers are on the spot. Cheap processing, enterprises mainly rely on state financial subsidies.

    What's more serious is that many infrastructure projects under construction in the countries along the route are long-term projects. It takes time to complete, and it takes longer to make profits and repay. There is a serious problem here. These countries along the route are in a geopolitical fragmented zone. Their domestic political situation is unstable, their neighboring relations are complex and tense, and the game between big powers and interest groups is fierce, and China's construction projects can easily become victims. Because these projects are costly and have far-reaching impact, if they fail, they will have a serious negative impact on the international reputation of the “Belt and Road” initiative. You need to think twice about this.

    After the end of the "Two Sessions" in 2018, the "Belt and Road Initiative" has entered a new era. It will become a new platform for international cooperation. What the "Belt and Road" initiative needs to solve is not a purely economic problem, but a comprehensive problem linked to political economy and culture. Specifically include: the welfare of the people of China and the countries along the route, the source of national wealth growth, the internationalization of the renminbi, the opening and internationalization of the Chinese market, reducing the imbalance of foreign trade, reducing dependence on the western economic system, and promoting the balance of the world economy Strategic issues such as development. In fact, the answer lies in the analysis earlier in this article.