Now is time to reinvent globalization

Beyond the forum, six recommendations to go further with the Belt and Road and bring success to nations related to it

In Beijing on May 14 and 15, a major multilateral consultation took place to further shape, after three years of existence, the Belt and Road Initiative. Nearly 30 heads of state, as well as many institutional, academic and economic leaders, shared their perspectives, hopes and worries regarding the initiative, hopefully brightening the road ahead.

After these consultations, six recommendations could be formulated to go beyond the forum itself:

1. The Belt and Road Initiative participates in the reinvention of globalization in a new model. Contrary to the previous wave of liberal globalization, the Belt and Road Initiative pledges to be multilateral, inclusive, and fostering faster and more balanced development in the economic space it defines, between Europe and East Asia and Africa. Multilateral and bilateral trade and investment agreements have to define frameworks that can vary depending on regional requirements, and companies, public or private, must then have the freedom of entrepreneurship and competition in a sound Europe-Asia-Africa economic space.

2. Europe is at the end, and at the beginning of the road. This is why more engagement by the European Union and European countries individually is needed, to make the initiative a truly multilateral one. This is paramount to create a common future for Europe and Asia, at a time when the United States remains hesitant as to the role it intends to play in global trade. Let's not pass on this window of opportunity for European nations, as well as their companies, to benefit from this new space. European companies have not waited for the initiative to be active in Central Asia, South East Asia, Africa or Central and Eastern Europe. But better financing conditions, stabilized country risks, more solvable demand, more demanding Chinese and local clients going for productivity and competitiveness will fuel new opportunities for sophisticated European companies, which also have a stronger cultural and geographic proximity to these markets. What worked in the ancient Silk Road can be revived.

3. A strong financial backbone to the initiative is paramount. The Belt and Road starts with the development of infrastructure, which will require long-term financing. A large balance sheet, state guarantees and better understanding of political and economic conditions across the very diverse national environments along the route will be key. The Belt and Road Initiative, the underlying political impetus and support, and the associated economic agreements should in turn work as an enhanced safety net, ensuring financing and guarantees on long term returns and payback.

4. The ancient Silk Roads were not developed in one day. The Belt and Road Initiative needs time. Some observers have stated that after three years, while Chinese activities in the Belt and Road geographical space are developing, this is "business as usual" labeled as Belt and Road. This is for the best. The Belt and Road Initiative can only be successful through a staggered approach, starting with political alignment, building of trust, feasibility studies, development of the adequate trade agreement, contractual and financial infrastructure, before the physical (ports, railroads, industrial parks and digital infrastructure, underlying broadband, mobile, internet, e-commerce and payment infrastructure) can be developed.

5. The Belt and Road has to be as innovative, green and digital as possible, as stated by President Xi Jinping and other leaders during the forum. Modern, inclusive and multilateral globalization is not about allocating capital and labor resources across geographies, and leveraging competitive advantage only stemming from lower cost countries, at a less advanced stage of development. The initiative is about increasing productivity and competitiveness through state-of-the-art technology and innovation, as well as entrepreneurship in less advanced countries. Westerners often regard innovation as disruption or displacement of traditional businesses. The Chinese internet giants insist on the connectivity potential of new technologies: Alibaba and its various avatars are not about disrupting traditional commerce, but creating more opportunities by connecting manufacturers and brands to consumers, otherwise secluded. The Belt and Road countries and their companies are another space for connectivity. Hence, the Belt and Road has to be at least as virtual and digital as it is about physical infrastructure.

6. The Belt and Road Initiative also has to invent new forms of partnerships: between Chinese and European companies, between State-owned and private companies, between financial institutions and private banks, and between very large companies and smaller entrepreneurs. Reinventing globalization in the Belt and Road space entails creating ecosystems where companies are mutually benefiting from each other's specialties and competences. This is where European companies, which still have a headway in industrial process improvement, productivity improvement, management of complex infrastructure projects and management of cultural differences, can bring not only products, components or systems, but also knowhow and management capabilities. In China and elsewhere along the route, this ecosystem approach should gradually replace the legacy joint venture, technology transfer approach.

The author is the Asia deputy president and senior partner of Roland Berger, a global consultancy. The views do not necessarily reflect those of China Daily.

(China Daily European Weekly 05/19/2017 page12)