21st-Century Maritime Silk Road Initiative

The following sections are included:

• Foreword
• Preface
• About the Editor
• Contents

“21st-Century Maritime Silk Road” (MSR) Initiative, announced by President Xi Jinping in 2013 when he visited Indonesia, indicates that China has ushered in a new phase of overall adjustment in foreign policies. The researches in this book are against such a background.

To build the 21st-Century Maritime Silk Road (MSR) Initiative is China’s major adjustment in international strategy in the new era. Centering on marine management and cooperation, and ensuring the economic cooperation and cultural exchanges among countries along the Road, the MSR initiative attempts to promote peace, friendship, interconnectivity of ports, innovation of economic mechanisms, and trade exchanges between China and the countries along the Road. It is hoped that a win–win economic and political development pattern of mutual reliance and mutual benefit can be formed in this way, and a better geopolitical and geo-economic environment can be created for China’s peaceful development…

The 21st-Century Maritime Silk Road (MSR) Initiative was launched at a time when China’s and the world’s economic development entered a new normal. Strikingly different from the other regional initiatives announced by China, this one reflects the realization among the country’s top leadership that a much more economically developed and powerful China may do something for the region. It also coincides with a time when a new phase of independent growth begins in its neighboring countries, especially after the 2008 global financial crisis. This means pent-up demand from China and from the other world powers to take action. China’s MSR initiative would surely exercise profound influence on this region.

Constituting a part of China’s open economy and offering an effective means for setting up pluralistic, balanced and open institutions, the 21st-Century Maritime Silk Road (MSR or the “Road”) is an economic and trading cooperation network established through the cooperative mechanisms for the ports and cities along the Road. Providing access to all the countries along the Road, this initiative of China’s is expected to raise their levels in terms of trade, investment and economic cooperation. Two aspects in upgrading the value chain (technological capability and production complexity) of the countries along the Road under the influence of the construction of the Road are discussed. The literature on value chain is reviewed in the first section. The optimal production complexity level of the finished product manufacturers, positively correlated to the market demand and negatively correlated to the costs, is higher in the open economy than that in the closed economy, as is indicated in the analysis of the theoretical model in the second section. This suggests that the MSR initiative will be conducive both to intermediate outsourcing of the enterprises concerned and to production complexity. In the third section, the Enterprise Surveys data collected by the World Bank Group are examined to determine the influences of the intermediate input ratio on corporate technological capability. Enterprises of five countries are chosen: China (2012), Indonesia (2009), the Philippines (2009), Sri Lanka (2011) and Vietnam (2009). It is revealed from the evaluation study by multilevel mixed-effects linear regression with subgroup levels being the industrial sectors and cities that the higher the intermediate input ratio is, the more beneficial it is to the corporate technological improvement in China, Indonesia and Vietnam. Differentiating between local and international outsourcing, we find that the higher the local intermediate input ratio, the more beneficial it is to the corporate technological capability in China. In Indonesia, the Philippines, Sri Lanka and Vietnam, however, the rise in local intermediate input ratio has no significant influence on their technological advancement. On the other hand, the more frequent the overseas outsourcing in the enterprises of Indonesia, the Philippines and Vietnam is, the more helpful it is for their technological progress, while in China and Sri Lanka the increase in offshore outsourcing has no significant influence on their technological sophistication…

Regional economic cooperation seems to be the way out of the present difficult international economic situation, as is agreed by nearly all Asian countries. Aiming at sharing with the countries along the Road and their citizens the bonus from its reform and opening up, China has put forward the 21st-Century Maritime Silk Road (MSR) Initiative as an initiative to implement its periphery diplomacy and to make contributions to the Asian economy, the principle of which being “affinity, sincerity, mutual benefit and inclusiveness”…

During his visit to Central Asia and Southeast Asia in 2013, China’s President Xi Jinping proposed that the Silk Road Economic Belt and the 21st-Century Maritime Silk Road (Belt and Road, or B&R) be built. In the spirit of “peaceful cooperation, openness and tolerance, mutual learning, mutual benefit and win–win results” and in the spirit of the times, it is hoped that the B&R can provide a unique opportunity for China and other countries along the Road, a new basis for China’s opening-up strategies in the transitional period and the application of a new-style regional cooperation mode…

The fresh challenge facing China today is how regional cooperation can serve China’s sustainable rise. It is hoped that China’s pioneering the 21st-Century Maritime Silk Road (MSR) Initiative could help it rise to that challenge and cement its relations with the neighboring countries in a new period. Pivotal to whether the initiative could serve the sustained growth of China is going beyond the traditional thinking of free trade and starting new regional cooperation, and the cooperation between China and the ASEAN will be among the initial steps.

The Belt and Road Initiative involves a new round of high-level opening-up in China. In its attempt to build an interconnected Asia, China also hopes to ensure its own energy security, and to expand its export. To this end, the Chinese government proposed the Asian Infrastructure Investment Bank (AIIB), and currently over 50 countries have expressed their willingness to be its founding members. At the same time, the pace of building domestic and international free trade areas has been quickened. However, during the whole process of China’s initiating the Belt and Road strategy, it is notable that New Delhi has never officially expressed its welcome for it, but India is at the intersection of the Belt and the Road. It did take part in the AIIB and carry out FTA feasibility study with China. In addition, it is an active member of the Bangladesh–China–India–Myanmar (BCIM) Economic Corridor, a part of the inland Silk Road. However, the Modi government is still suspicious of China’s Maritime Silk Road (MSR) initiative and that is why it came up with its own Project Mausam, a plan that is virtually the equivalent with China’s MSR initiative, except that it excludes China from the Indian Ocean. Such ambivalence of India’s — economically exploiting China’s projects but politically feeling biased against the MSR initiative — is very interesting. In such a situation, how should we enlist cooperation with India? That is the major concern of this part…

The Belt and Road Initiative, including the “Silk Road Economic Belt” (the “Belt”) and the 21st-Century Maritime Silk Road (MSR or the “Road”), is the going global strategy by which China hopes to stabilize its neighboring countries and make them prosper in the new period. Its main purpose is to build an economic system in which the countries along the Road can achieve growth together with China, and all the countries concerned can enjoy lasting peace and long-term stability. Although there is close similarity between the Belt and the Road, different approaches and policies should be developed to deal with the Belt and the Road separately owing to the distinct backgrounds of the countries concerned in order that a positive result be obtained…

The following sections are included:

• Meeting Minutes of the Forum “One Belt, One Road” Initiative and China’s Adjustment in its Diplomatic Layout
• Li Xiangyang, Researcher of National Institute of International Strategy, Chinese Academy of Social Sciences (NIIS, CASS)
• Tang Yongsheng, Professor and Deputy Director of the Institute for Strategic Studies at National Defense University PLA
• Shi Ze, China Institute of International Studies
• Zhai Kun, Professor of Peking University.
• Gao Cheng, Researcher, NIIS, CASS
• Wei Ling, Professor, Institute of Asian Studies, China Foreign Affairs University
• Feng Yujun, Researcher, China Institute of Contemporary International Relations
• Xu Hongqiang, Development Research Center of the State Council
• Zhang Jianping, Researcher, Academy of Macroeconomic Research, National Development and Reform Commission
• Feng Weijiang, Researcher, Institute of World Economics and Politics, CASS
• Yin Zhen, Director, Institute of Comprehensive Transportation of National Development and Reform Commission
• Wang Jinbo, post doctoral student, NIIS, CASS
• Lei Xiaohua, Researcher, Guangxi Academy of Social Sciences
• Zhou Shixin, Researcher, Shanghai Institute for International Studies
• Quan Yi, Researcher, Asia-Pacific Institute, Fujian Academy of Social Sciences
• Lin Yueqin, Researcher, editor of Social Sciences in China
• Song Yinhui, Researcher, China Institutes of Contemporary International Relations
• Xu Liping, Researcher, National Institute of International Strategy, CASS
• Zhao Jianglin, Professor, NIIS CASS
• Wang Yuzhu, Researcher, NIIS, CASS

The following section is included:

• Index