Implications

The last part of my presentation looks at China. And one of things I’d like to concentrate on is the Belt and Road Initiative. And it’s unveiled by President Xi Jinping in 2013. And what it is? It’s a modern formulation of an old concept, the silk road goes back to 3 centuries, where Marco Polo, for example, took a camel expedition travel from Venice in Italy and travelled through Asia as reach Pakistan and India. And two things happened, he brought his goods to trade with countries along the way, And he took back with him goods which were not available in Europe. And so close example was the primary example. So the Silk Road derives its name from there. What it was?

It was an international trade road, which started three centuries ago. Now when the President unveiled his belt and road initiative, he was really building on this historic experience. And what he wants to do is to create more connectivity with regions, much wider than simply the old silk road, but increase connectivity to allow increase economic activity, particularly to enable trading with China as a center of that. So if you like it’s a huge initiative in foreign policy, it’s a huge initiative in trade development and it’s a initiative then which as very substantial implications for tourism. How big is it? Well, it’s certainly for most people’s viewpoints, it’s the largest infrastructure and investment project in history.

If you look at the belt, it covers more than 68 countries. 65% of the world’s population live within this belt. And 40% of GDP is created from it. Okay? Now why did the president announce this policy?

Well, he knows better than I but let me tell you why I think this happened. First of all, he recognized what’s many development economists recognized before him that without good infrastructure you can not develop. And it’s not just economic infrastructure, railways, airports, which stimulates growth. It’s also social infrastructure. So you got some invest, for example, in education you got invest in social improvement for people, medical services and things like that. But one of the biggest problems certainly in Asia, and I will go beyond that, in many parts of developing world is that infrastructure is poor or non-existent. And if you don’t have infrastructure, how can you generate trade? And therefore, part of this idea was to develop regional integration.

And therefore, one of the things of the Chinese government did was to develop the Asian Infrastructure Investment Bank. What is this? Well, it’s a bank which now was over 50 members. which actually provides money for infrastructure development in member countries. So if you like, without that investment in project like railways and airports, social investment in education and similar, without that then development can not take place. And in secondly, I think it is reasonable to say that the Chinese government felt perhaps that the Asian Infrastructure Investment Bank and the World Bank were not investing as much Infrastructure as they should be doing. Secondly, much of investment needed in Asia then wasn’t been made available.

That’s a controversial point I am raising it because I think it is a part of a wider I debate. But it is no doubt that if you look at the Asian Asian Infrastructure Investment Bank it is attractive virtually all the major countries in the world to become members. Because they see the need for infrastructure, they know how very expensive these projects are, and they see the possibility of getting some of the business. In addition to that, the China government has also set up that a Silk Road Fund and the fund will invest not in infrastructure but in business in the particular regions.