Carlos Aquino*
From April 25 to 27 the Second Belt and Road forum will
be held in Beijing. 37 head of state and representatives of more than 150
countries will attend the event where President Xi Jinping will give a speech[1].
In the first forum held two years ago 29 head of state and representatives of
130 countries came[2]. President
of Russia Putin and President of Egypt among others will attend. From Latin
America President Piñera of Chile and Morales from Bolivia are among the confirmed
to attend the forum.
Up to now many countries in the world have joined the
initiative and signed memorandum of understanding or MOU, and in Latin America
17 countries have done that. Peru is not among them, yet.
President Xi Jinping exposed the initiative of the Belt
and Road in September 2013. The Belt and Road initiative at first aimed to
reconstruct the old Silk Road that connected China and Europe more than 2000
years ago. That route was no longer in use from some centuries ago so the idea
was to connect China and Europe again through a land link. But then the
Maritime Silk Road of the 21-century idea was added to connect also China with
South Asia and Africa through the maritime route that was used through big part
of the last centuries. The legendary travels of the Chinese Admiral Zheng He
during the first two decades of the 15th century connecting China with South
Asia and Africa, in ships bigger than the caravels of Christopher Columbus, the
Italian navigator who discovered for the European the American continent 70
years later, also inspired the idea of the new maritime Silk Road of the 21st
century. Besides that, we have to remember that from the second half of the XVI
century to the first decade of the XIX century, the
Manila Galleons trade connected the Latin-American colonies of Spain with China
(and Asia). So also, an eastern Maritime silk Road existed.
The reconstruction of the physical infrastructure to
move goods and people across continents, Asia to Europe, Asia to Africa, and
Asia to Latin America, is much needed. Trade and investment, that are made
easier and cheaper by better connectivity, are the engines that make possible
economic growth and the improvement of people standards of living.
Many countries in Asia, Africa and Latin America are
in much need of investment in infrastructure to improve their connectivity. But
many countries in those regions cannot afford by themselves to invest in the
construction of that infrastructure. In that sense China offer to help those
countries by giving loans to construct the infrastructure needed is interesting.
Also, companies in China have developed the technology needed to construct that
infrastructure, like seaports, airports, roads, railways, but also power lines,
hydroelectric plants, and nuclear stations. They offer to build those works at
lower costs than companies from the developed world for example.
So, when China announced the Belt and Road initiative,
simultaneously also announced the setting up of several financial institutions
needed to finance the idea. The setting up of the Silk Road Fund and
specifically of the Asian Infrastructure Investment Bank represented a
necessary step to make the initiative become a reality
There have been some critics about the Belt and Road
initiative, especially directed to the loans that some countries have taken
from China to finance some projects. It has been said that some countries took
many loans that exceed their capacity to repay them. Another critic is that
some projects perhaps were not that much necessary to undertake.
To avoid those criticisms, when countries undertake
projects under the Belt and Road initiative, they should carefully consider the
real need to carry on them. Specially if they also borrow money for that,
considerations should be given so loans could be repaid without affecting the
public finances. Besides that, it should be noticed that the construction of
public works requires a public tender process, something that sometimes is not
fully applied in China. Then, to avoid misunderstanding among parties, due consideration
should be given to the differences in how public works are carried on in China
and the Latin American region, for example.
But then, the Belt and Road initiative consist not
only of the construction of physical infrastructure for better connectivity.
The idea also emphasizes the need to coordinate policies to have major cooperation
in many areas and for the achievement of common interests; the need to promote
trade by eliminating barriers to it through the signing of trade agreements for
example and the simplifications of procedures for the fast and smooth movement
of goods and services; the need to increase the level of financing and
investment; and for people to people connectivity.
Regarding Latin America and the Belt and Road
initiative, as said before already 17 countries have signed a MOU to join it.
Peru has not yet signed it but the country has a Free trade area agreement with
China that has helped to increase its trade with China since the agreement
entered into effect in 2010. Now China is the biggest trade partner of Peru,
and last year 2018 for example, exports of goods to China accounted for nearly
28% of all goods sold abroad (USA was in second place with only 17%). In the
case of Chile, that with Peru and Costa Rica are the three countries in Latin America
that have FTA with China, also trade with China increased after the agreement
entered into effect and now it is its biggest trade partner.
Regarding investment and financing, countries like
Peru has received a large influx of Chinese investment not only in the mining
and energy sectors, traditional places of interest for Chinese companies, but
lately also in sectors like construction and maintenance of roads, and in this
year World Economic forum of Davos it was announced that the Chinese company
COSCO Shipping Ports would invest up to 3 billion dollars in the construction
of a seaport in Chancay, a city north of Lima, Peru´s capital.
With respect to people to people connectivity, in the
last years the number of academic exchanges, for example of students from Latin
American countries going to China has increased, an also of Chinese students
coming to the region. Also, professors from both sides of the Pacific have been
traveling more often and in major numbers, myself being one of them. Here the
importance of learning each other´s language is becoming more relevant to
achieve a better mutual understanding.
In summary the Belt and Road initiative offers a way
to achieve major trade, investment and improve mutual understanding of for
example China and Latin-American. In this way the renaissance of a sort of
Manila Galleon trade, connecting the Latin-American region with China (and
Asia) will become a reality. But to avoid also some repetition of the kind of
trade that existed during the Manila galleons trade, when mainly silver from Latin
America was exchanged for manufactured goods from China, a feature that also is
prevalent in the present trade pattern of China with the Latin American region,
in which Latin America send mostly minerals and agricultural products in exchange
for manufactured goods from China, Latin America must learn from China economic
development experience.
China also before it introduced 40 years ago economic
reforms, had a limited trade with the world when mainly exported primary goods
in exchange for manufactured goods. But through the introduction of modern
technology, the upgrading of skills of its labor force, and the modernization
of its physical infrastructure, among other factors, China has become an
economic powerhouse exporting to the world evermore sophisticated manufactured
goods. Latin America should learn from this example. China can offer the technology;
the investment needed for the modernization of its infrastructure, and Latin
America can learn how to improve the skills of its labor force from China
experience.
If to some extent China and Latin American are
complementary economies, the belt and road initiative could help to upgrade the
level of economic relations. It is up to the Latin American countries to take
advantage of that and so, as the Chinese says, a win win relationship could
materialize.
*Director
of the Center of Asian Studies, and Vice Dean of the Faculty of Economics, Universidad
Nacional Mayor de San Marcos, Peru
No hay comentarios:
Publicar un comentario