Some projects envisaged for the "one belt, one road" program will be financially attractive or made so. But the "one belt, one road" project is very much not limited to railroad construction. Now, however, parts of the process that began in Shenzhen in 1980 are going into reverse. A Biden White House might pursue a more multilateral counterweight to Beijing, especially by paying more sincere attention to the emergent Indo-Pacific alliance, but it would not drastically shift the American foreign policy course. Shorter routes are the keys to speed – and profit.  And routes under Chinese, Russian, and European control will arguably be more secure from exploitation by the much-feared U.S. National Security Agency. In any event, while Washington works itself into a lather over Chinese pave-overs of reefs in the South China Sea, Beijing is focused on much bigger things. US capital streamed into Shenzhen and other manufacturing centres and the output of their factories streamed back across the Pacific and into the hands of US consumers, a process particularly accelerated when China joined the World Trade Organisation in 2001. The same, for other reasons, is true of China and Russia, and of China and Iran. $40 billion has gone into the Central Asia-focused Silk Road Fund. It is a multifaceted and nuanced story. This is the digital age. November 12, 2002 33 min read. Having produced amazing economic development in China itself, Chinese capital, energy, and infrastructure-building expertise are now focused on Central Asia, Russia, Europe, and the Middle East. Economics Biden, Like Trump, Will Deepen Integration With China Over the past four years, economic ties between Beijing and the rest of the world have only strengthened. Jeremy Cliffe is International Editor of the New Statesman. In 2014, 55 percent of Chinese lived in cities, up from less than 20 percent in 1980. A large part of the work on these projects – as much as 70 percent, if past practice is a useful guide, but far from all of the work – will be done by Chinese companies. The rapid rise of China and India, and the growing economic integration between them, has clear implications for US, European, and Japanese multinational corporations. The United States is in denial about the nature and direction of change in the global political economy. Its institutional linkages will facilitate the investment necessary to realize these efficiencies. That was particularly the case after the global financial crisis. Chinese growth is weaning itself from dependence on domestic fixed asset investment and transitioning to reliance instead on the expansion of the services and domestic consumption. The purpose of the "one belt, one road" project is to promote its economic integration with what has been called the "world island" – the conjoined continents of Asia and Europe. Over the past year, the U.S. has imposed tariffs on $250 billion worth of Chinese imports and China has retaliated, raising tariffs on U.S. exports. Some countries, such as China, hope to promote 10+3 (the ASEAN economies plus China, Japan and the Republic of Korea) cooperation, while other countries, such as Japan, prefer 10+6 cooperation (the ASEAN economies plus China, Japan, ROK, India, Australia and New Zealand), and it was difficult for each other to reach consensus. America does not occupy a similar commanding position now. One study estimates, for example, that a relatively modest five percent growth rate in such assets from their current base could create 137 million tons of demand for Chinese steel. Thus, China cannot be a main contributor to East Asian integration as expected, owing to the inward-looking nature of its economic regionalism. Chinese firms got the message: there has been a precipitous fall in Chinese investment in the US, and while US investment in China remains flat overall, it has fallen in crucial areas such as information and communications technology, machinery and financial and business services. To continue to lead, one must engage and contribute, not deny the reality of change or boycott, bluster, and block needed reforms. Covid-19 began in China, in Wuhan, and Beijing’s opacity about the pandemic hugely undermined international trust in it. Chinese state-owned enterprises have more money for infrastructure build-out than they can profitably deploy in China, where returns on such projects are very low at present. From left to right: Mr Lye Liang Fook, Mr Joergen Oerstroem Moeller, Dr Francis Hutchinson, Dr Hoe Ee Khor, and Dr Chaipat Poonpatpibul. China is already the world's largest digital marketplace. They are explicitly inclusive rather than conditional or limited to countries that meet Chinese-imposed criteria for lending. A third trunk will go through Kazakhstan and Russia to Western Europe. In many ways, the U.S. and Japanese responses to China's increasing role in global economic affairs remind me of the dysfunctional reactions of an entrepreneur as the private equity boys reorganize the company he founded, change its management, do transformative mergers and acquisitions, and deprive him of all pretense of control over his company as they take it public. Less explicitly, it also summed up another assumption, namely that the rise of China and other emerging economies would happen in a US-led geopolitical order; that China could become rich without becoming challengingly muscular. A lot more money is on the way. As one example of what China has in mind, consider the economic corridor that is to link Kashgar, in Xinjiang, with the port of Gwadar, in Pakistani Balochistan, 1,800 kms. They will not just improve connectivity for landlocked countries along the "one belt, one road" routes but also speed up data exchanges between Europe and Asia. This justifies a certain measure of skepticism about the numbers China has attached to its aspirations. Economic integration, or regional integration, is an agreement among nations to reduce or eliminate trade barriers and agree on fiscal policies. This is an area with a population of 4.4 billion and a current economic output of $21 trillion. Â. However, this literature has not addressed the role of cultural factors in the economic fragmentation in China and paid very limited attention to the intra-provincial economic integration. An initial tranche of $50 billion has been committed to a new Asian Infrastructure Investment Bank (AIIB). They now contribute almost half of Chinese GDP, up from less than one-third ten years ago. Still, given China's emphasis on collaborative planning with foreign partners, a good deal of it seems certain to be used actually to build things. The decoupling has been particularly stark in the technological sphere, amid concerns about the Chinese appropriation of US intellectual property, and with the forced sale of the American operations of TikTok (a Chinese video app) and a blacklisting last year of the Chinese telecoms giant Huawei (which was founded in Shenzhen and whose founder and CEO Ren Zhengfei was in the audience for Xi Jinping’s speech there last week). It now has the world's largest broadband network.  But the initial emphasis on state-owned enterprises replicates the infrastructure-investment-led approach to development that has run out of steam in China's domestic economy. $5 billion has gone into a new "Marine Silk Road Bank." A New Statesman Media Group special on the decoupling of America and China. A similar situation can be identified in China where HSR is seen as one of the elements in the long-term national economic integration and a catalyst for economic growth. It would also offer a new outlet for the investment of China's huge foreign exchange reserves, which have been concentrated in U.S. Treasury bonds and other instruments with very low yields. The optimistic view in the 1990s, as Shenzhen and other Chinese manufacturing centres took off and export volumes across the Pacific expanded, was that the economics dictated the geopolitics; that by knitting together the two economies the US and China would have too many shared interests to come into conflict. And Japan has announced its own $110 billion infrastructure investment fund for Asia.  The justification for this Japanese fund is geopolitical rivalry with China. Almost half of the expansion in the world's high-voltage electrical transmission lines is now taking place in China. But others, especially those relating to strategic sectors, will continue to decline. China built its first expressway in 1988. Doing this is how one repositions oneself to future advantage. The result was a fall in the volume of trade between the two countries in 2019 (when America’s trade volume with both Mexico and Canada exceeded that with China). Nor, as I vividly recall, was Deng Xiaoping's 1978 announcement of his vision of "reform and opening." The “new security concept” of the 1990s informed the more thrusting notion of “China’s peaceful rise” promoted by Beijing under Hu Jintao from 2003; a mix of friendliness and wariness echoed back from Washington in urgings that China be a “responsible stakeholder” in the global order, a term coined by then deputy secretary of state Robert Zoellick. Member countries remove all barriers to trade between themselves but are free to independently determine trade policies with nonmember nations. It tells a complicated story, of US-China entanglement in some fields but not in others. The initiative is also a way of developing Xinjiang and other parts of western China by making them key connectors to Central Asia, Russia, Europe, and the Middle East. So now, as the US approaches an important presidential election on 3 November and questions about its wider future abound, the New Statesman Media Group is joining forces to tell that story. These are early days in the development of a program conceived to span three or more decades. China's private sector companies are very good at exploiting opportunities for investment fueled by credits from the Chinese state. Some forms of bilateral trade and investment may continue healthily. An opening contribution of $10 billion – some of which will go to Silk Road projects – has gone into the BRICS-led New Development Bank. China is in the process of becoming the world's preeminent economy. Internationally, most attention has focused on Beijing's ambition to build 81,000 kilometers (about 50,000 miles) of high-speed railways connecting itself to everywhere else in Asia and Europe. The creation of the SEZ in 1980, when today's futuristic metropolis of 13 million inhabitants was a fishing village, was an early landmark in the opening up of the Chinese economy under Deng Xiaoping, and with it came probably the biggest economic story of our time: the integration of the Chinese and US economies. China’s economy deepened its integration with the rest of the world in October, with foreign investment increasing amid strong spending in R&D … We cannot hope to prevent this through military maneuvers and exclusionary trade arrangements even if it were in our interest to do so, which it is not. Hence the importance of the international consultations and strategic planning efforts that are about to get underway. Investment Monitor has dug into the numbers to explain how and where the decoupling is taking place. China has its act mostly together. If nothing interrupts this process, it will reverse 40 years of increased trade, financial and economic integration of the two countries. The old model based on integration of trade with global markets but with limited financial linkages has reached the end of its useful life. But the Japanese initiative seems likely simply to support rather than undermine the Chinese objective of strengthening pan-Eurasian economic ties. The devil is always in the details, but if China's vision is realized in any significant respect, in time all roads in Eurasia will lead to Beijing. This is an area with a population of 4.4 billion and a current economic output of $21 trillion. This article is part of a wider special New Statesman Media Group feature on the US-China decoupling. If the 1990s were the era of the Golden Arches theory, and the 2000s the era of the peaceful rise and Chimerica, then the 2010s were the era of the “Thucydides trap”. In early October it handed out some $1.5m – in Shenzhen, of course – to test a digitisation of the renminbi that Chinese officials hope will help lead to a counterbalance to the dollar. Larry Summers called this interdependence a “balance of financial terror”, where China relied on US spending and the US relied on Chinese financing. And China seems confident that its economic size and dynamism will make it a major beneficiary of any removal of barriers to trade and investment or improvement in the communications efficiency in the Indo-Pacific. This would reduce oversupply in the Chinese steel industry from 22 percent to 8 percent. And China is indeed rising, but is most concerned with establishing a clearly demarcated zone of influence. More probable is that the contest will force a choice for other countries and technology platforms; between the US and China, between Silicon Valley and Shenzhen. This suited the thinking in Beijing, where the “new security concept” that took hold in strategic circles in the years following the end of the Cold War preached the benefits of mutual security, cooperation, trust and common interests.

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