Chinese Vice President Wang Qishan told the audience at this year’s World Peace Forum that “development is the key to resolving all issues”, remarking in the run-up to his conclusion that “China’s development can’t shut out the rest of the world” and “the world’s development can’t shut out China”. International media interpreted this his remarks as a jab against Trump’s protectionist economic policies and the aggressive trade war that he’s waging in an effort to reroute the global supply chain away from China, but his words are much more important than the reactive rhetoric that they’re being presented as.
In fact, Vice President Wang’s comments are visionary because they represent a completely new model for resolving the world’s many conflicts, one which could realistically be applied through China’s Belt & Road Initiative (BRI). To explain, the previous approach to resolving international problems has been the use of force or the threat thereof, something that the US has over-relied on since World War II and especially since the end of the Cold War. Washington has also started waging hybrid wars against targeted states whereby it uses informational and economic means to undermine targeted states in order to extract concessions from them.
The American approach has destabilized the world, made it a more dangerous place, and negatively impacted the developmental prospects of the millions of people victimized by this policy, but China has now created a model for counteracting all of those consequences and repairing the damage the the US is responsible for. The end goal of BRI is to build a community of shared destiny in which all countries have an equal stake in maintaining the emerging multipolar world order that’s being pioneered by the new trade routes that China is constructing, which can imbue their people with a sense of optimism for themselves and future generations.
This is immensely important because certain at-risk demographics such as some ethnic and religious minorities are less likely to be influenced by extremist ideologies if they truly believe that they have a chance to succeed in the existing system, therefore reducing the likelihood of them committing terrorist acts in an effort to radically change the status quo that they’re so dissatisfied with. Of course, there will always be some irredeemable radicals who aren’t positively influenced by the visible development taking place all around them, but the majority of dissatisfied and at-risk individuals aren’t blind to the many opportunities that this entails for them.
As a case in point, the China-Pakistan Economic Corridor (CPEC) has brought so many benefits to the host state’s previously underdeveloped region of Balochistan that the founder of the “Baloch Liberation Front” Dr. Jumma Khan Marri disowned the separatist cause that he previously fought for and launched the Overseas Pakistani Baloch Unity (OPBU, nowadays rebranded simply to PBU) organization last year for peacefully reintegrating his wayward compatriots back into the national fold. He even went on record as crediting CPEC for inspiring him to lay down arms because he said that it has given the Baloch hope for their future.
The precedent trailblazed by Dr. Jumma could prospectively be applied in Myanmar’s Rakhine State through the China-Myanmar Economic Corridor (CMEC) if the government worked together with the region’s Rohingya minority to replicate the success that the Baloch have achieved in Pakistan through CPEC, which could in turn inspire local militants to also abandon their armed campaign against the state as long the developmental needs that they were fighting for are properly met. The same can be said for the many militant groups in India’s Northeast if New Delhi made progress on the Bangladesh-China-India-Myanmar (BCIM) Economic Corridor.
BRI’s economic integration of peripheral minority groups into the national fabric can facilitate their assimilation into society and consequently increase the odds that political solutions can be found to their armed conflicts. That’s what Vice President Wang was implying when he said that “development is the key to resolving all issues” and why he pointed out the impossibility of isolating China’s development from the rest of the world’s. The socio-political benefits derived from BRI’s worldwide network of Silk Road economic connectivity are a key component of the new international system and are thus indispensable for ensuring global stability.
DISCLAIMER: The author writes for this publication in a private capacity which is unrepresentative of anyone or any organization except for his own personal views. Nothing written by the author should ever be conflated with the editorial views or official positions of any other media outlet or institution.
The world does NOT understand the CCP ECONOMIC PRINCIPLES
People misread and misjudge the CCP ECONOMIC PRINCIPLES in their prognosis of doom for the Chinese economy – w.r.t the massive upliftment of 100s of millions out of abject poverty,drudgery and misery.
Take the example of the Chinese “Ghost Towns” and its impact on Bank NPAs
Let us assume that 30 million tons of steel,was used in the so called ghost towns,15 years ago.After 30 years, when these buildings are replaced,this will be steel scrap,and its price will be double the price.of prime steel today.The cement is a dead loss.
But let us dig deeper.Bao Steel may bill steel to a builder,at say,200 usd/ton,but the Marginal cost of that steel,might be 100 usd/ton.This is not enough.The Marginal COST To the steel cluster,in a communist nation would be 15-20 usd per ton,as the coal mines and steel factory,ports,rails,roads etc.,are already in place.The difference between the coal tarriff and the marginal cost of coal is a TRANSFER PAYMENT FROM Bao steel to the coal mine and ports etc (if Bao is buying Coal)
If Coal is selling at 50 usd/ton,the Marginal Cost would be 4-5 USD (being cost of power,diesel and cost of variable labour).
So the MARGINAL COST of the Ghost towns,would be 10-15% of the contracted value of the towns.
At that time,it was the RIGHT decision to set up these “ghost towns”,as the price of steel,coal,cement,paints,labour etc., was much lower,and so was their marginal cost.It made sense to lower the ENTIRE PRODUCTION cost of these plants, by MAXIMISING production, and then using the production,in so called GHOST TOWNS.The benefit of lowering the ENTIRE PRODUCTION cost of the steel,coal,cement plants,would be in the billions of USD.IF THE SAME INFRASTRUCTURE WERE TO BE SET UP AT TODAY’s PRICES OF steel,coal,cement,the cost WOULD BE MUCH HIGHER (far beyond the accrued Chinese Inter bank interest rates over the years)
As far as the banks who lent to the builders of these so called ghost towns – it is important to understand that the Banks have NOT funded the towns.The Banks have funded the input suppliers of these towns,id.est., the steel,cement,paints, furniture and appliances etc factories. In particular,the banks have implicitly funded,the profits of these input suppliers.
Then we calculate the employment provided to a mass of labour in these ghost town projects,and its attendant benefits and the management and technical expertise,developed by the builders,in these ghost town projects.
It must also be noted that the INCREMENTAL PROFITS earned by the steel,cement,paints,furniture and appliances etc. factories,as suppliers to the builders of the ghost towns – would have in the last 15 years,based on a ROCE of 20-30 % ,yielded an aggregate return of 1000-1500% to date (with the attendant revenue streams to the PRC,in the form of direct and indirect taxes,besides other incidental gains)
Hence,for a Communist nation,the Marginal Cost for the Cluster of the “Ghost Towns” (which includes the downstream supply chain benefits and the benefits to the state) is very low and MIGHT even be NEGATIVE,based on the Marginal Cost of the CLUSTER.
If the PRC calculates the incremental gains to the steel,cement,paints,furniture and appliances etc. factories,and their staff,over the past 15 years and the revenue earned by the state from this chain,over the last 15 years,the gains per se, could more than bail out the bank loans,to the so called ghost towns
IT MUST BE NOTED THAT THE LABOUR USED IN THE GHOST TOWNS,AND THE LABOUR USED (IN PART),IN THE INPUT SUPPLIERS, TO THESE GHOST TOWNS – would have had NO OTHER employment,were it NOT for the Ghost town projects. These millions of labour were introduced into the labour pool,ONLY due to these Ghost Towns.Of course,they would have inevitably entered into the labour pool – but only after 5-10 years (on such a large scale).
Hence,there is no loss to the PRC,on account of these so called “ghost towns”.dindooohindoo