Trade and Investment Along the Belt and Road Region Soar

The Covid-19 pandemic has been spreading across the world since early this year. However, China’s investment cooperation with countries along the Belt and Road region has been growing amid the global economic downturn. Data shows that from January to October, China’s total non-financial investment amounts to RMB 602 billion, which is down by 3.2%. The number of outbound dispatched laborers has reached 231 thousand, and the number of total dispatched laborers overseas has reached 631 thousand.

China’s investment cooperation with countries along the Belt and Road region has been developing steadily. Between January and October, Chinese companies’ non-financial investment in countries along the Belt and Road region reached USD 14.11 billion, up by 23.1%. Such investment accounts for 16.3% of the total investment, up by 3.6%. The Belt and Road cooperation has exhibited a strong momentum.

Providing medical assistance for the Silk Road

According to statistics, China has provided more than 280 batches of emergency medical assistance to more than 150 countries and international organizations. As the Covid-19 pandemic ravages the world, China has served as the world’s largest supplier of anti-pandemic materials and has provided large volume of materials and technical assistance for countries in the Belt and Road region.

“In March, when Italy was suffering the most from the virus, we dispatched blood product experts to take 40 batches of convalescent plasma, which the specific drug needed for critically ill patients, to Italy. We brought Chinese experiences of fighting COVID-19 pandemic to the Italian people,” said Shi Shengyi, Vice President of Sinopharm at the 12th China Overseas Investment Fair.  

China has provided more than 280 batches of emergency materials for more than 150 countries and international organizations. Mohamed Juneid, Second Secretary of the Embassy of the Islamic Republic of Pakistan in China, said that during the COVID-19 pandemic, China has been working with Pakistan as though they were brothers, and both countries helped each other at different times.

The COVID-19 pandemic also created opportunities for investment and trade cooperation in emergency industries between China and countries along the Belt and Road region, not just in the fields of medical assistance and emergency mechanisms.

Li Haibo, Emergency Industry Commission Director of the World Geetuk  Trade and Economic Promotion Society, said that the pandemic has forced many countries to focus more on the development of the medical industry and promoting the capacity to tackle large-scale disasters. It is imperative to guide Chinese companies to go overseas, greatly restore and upgrade the global industry chain operation, and achieve the free flow of medical materials within the region.

Mohamed Juneid said that China and Pakistan should work together to build hospitals, medical centers and also warehouses for storing medical materials. Pakistan has provided many favorable policies in this vein, and both parties should enhance cooperation in the emergency sector.

Trade and investment cooperation progress despite pandemic

The large-scale projects have resumed production, and China’s trade and investment cooperations with related countries have grown faster than the national average.

Many Belt and Road projects faced huge challenges during the early phase of the pandemic. Hu Biliang, Executive Director of the Belt and Road School of Beijing Normal University, said that many projects have been stopped due to the impact of the pandemic. Many countries have to reduce or suspend land, sea and air traffic, which brought a negative impact to some of the Belt and Road construction projects overseas.

However, “because of the rapid economic recovery and the opening-up policy, as well as the good economic foundation build over the past 7 years, China has shown great resilience in the Belt and Road cooperation,” said Meng Wei, Spokesman and Deputy Director of the policy research institute of the National Reform and Development Commission.

The resumption of work and progress of large-scale projects have proved this. At present, all the tunnels of the China-Laos railway have been completed, the Pakistan Lahore green line project has started operation, the construction goals for the Jakarta-Bandung High-speed Railway have been completed, and the EPC prime contract for the Hungary-side of the Hungary-Serbia railway project has come into effect. These are more examples of China’s trade and investment cooperation with countries along the Belt and Road region showing strong vitality and resilience.

China’s trade and investment cooperation with related countries has grown faster than the national average during the first three quarters of this year. Data shows that China’s total trade volume with countries along the Belt and Road region amounts to USD 963.42 billion, down by 1% from last year, but 0.8% faster than the national average. The non-financial direct investment in countries along the Belt and Road region has reached USD 13.02 billion, up by 29.7% and 32.3% higher than the national average.

The China-Europe Express has also shown rapid growth. Statistics show that by November 5, there were 10,180 China-Europe express freight rail journeys this year, already surpassing the total number recorded in  the previous year. Approximately 927,000 standard containers were shipped, up by 54%. The two-way full shipment rate reached 98.3%.

It is said that the National Reform and Development Commission has been working with related departments and local governments to raise the shipment capacity of the China-Europe express.

Good prospects to be expected

Pakistan’s Ambassador to China, Moin ul Haque, said that Pakistan has established nine special economic zones along the Belt and Road region. It is believed that China will be able to achieve capacity and business transfer through these economic zones, and this will also attract investors from other countries to invest in businesses in Pakistan.

The construction of trade and economic cooperation park zones in foreign countries has become an effective vehicle for implementing the Belt and Road Initiative. Ethiopia’s Eastern Industrial Zone is one example of this. Teshome Toga, Ethiopia’s Ambassador to China, explained that at present, many companies in the agriculture, chemical and manufacturing sectors have started businesses in the industrial zone, bringing trade and employment opportunities for the local community. The industrial zone is expected to become the manufacturing base for Africa as a whole.

The promotion of Belt and Road cooperation will embrace a series of new policies. Meng Wei said that the National Reform and Development Commission has been working with other departments and local governments to upgrade the shipment capacity of the China-Europe express. The first policy is to enhance the construction of key entry ports; the second is to promote the upgrading of  “bottleneck” parts of western, middle and eastern channels; the third is to accelerate the construction of the demonstration project of the China-Europe express assembly center. He said that China will uphold the principles of mutual construction, negotiation and sharing, in order to promote the construction of the Belt and Road and achieve shared prosperity of related countries.

Control investment risk 

Wang Zhaoxing, counselor of the State Council, counselor of the Belt and Road Financial Cooperation Research Institute and former Deputy Chairman of China Banking and Insurance Regulatory Commission, explained that as the pandemic spreads around the world, the emerging countries along the Belt and Road region face dual pressure from currency depreciation and economic downfall. The debt default risk is rising. Chinese financial institutions need to ensure safe development and control the investment risk.

Wang Zhaoxing said that the Chinese financial industry has made important progress in the construction of the Belt and Road, and has laid a solid foundation for financial cooperation along the Belt and Road countries. He shared a set of data reflecting this.

In the area of the financial institution layout along the Belt and Road region, by the end of 2019, 11 Chinese banks had set up 80 first-grade branches, three insurance companies and six insurance operation institutions in Singapore, Indonesia and Malaysia. Chinese financial institutions have expanded their business in countries along the Belt and Road region to provide better financial services for companies going overseas.

On the other hand, China is accelerating the financial opening-up, in order to support companies and insurance companies of countries along the Belt and Road region to start businesses in China. By the end of last year, 48 banks and some insurance companies from 23 Belt and Road countries have set up branches in China.

This year, the COVID-19 pandemic has had a heavy impact on the global economy, as well as the financial market and the transactions of countries along the Belt and Road.

Wang Zhaoxing also gave several suggestions regarding how to cope with risks and promote financial cooperation and transactions in the Belt and Road region.

The first is to ensure safe development. Thus is imperative for controlling investment risks in overseas market during financial cooperation and capital transactions.

The second is to continue to promote the business layout of Chinese banks and insurance companies in Belt and Road regions, increase financial service coverage and improve financial services. 

The third is that financial institutions should focus on the development of the global pandemic, enhance policy support and provide accurate financial services. It is also important to improve the risk control capacity and build a stable, sustainable, diversified and long-term financing system under the framework of the Belt and Road.

The fourth is promote the regional development of the RMB as a currency. RMB internalization is the overarching direction and purpose, and the regionalization of RMB is the important driving force. It is important to build up the RMB as the main currency of the region. Developing the bond market, especially RMB sovereign bonds, is also an important way for promoting RMB internalization.