Page 68 - 2017 White Paper
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7 White Paper on the Business Environment in China
• Japan and the U.S. should seek a new capital and South Africa. And there are the individual Chinese
increase for the ADB or a special capital increase. The development banks, too – the China Development
ADB recently increased its lending by 40 percent, which Bank, which has $100 billion in capital, and the Export
is a positive development. However, Asia is facing a Import Bank of China. These banks already give more
projected $8 trillion infrastructure gap over the next loans to Asia and Latin America than institutions like the
decade. The ADB and World Bank together offer less World Bank, the Asian Development Bank, and the Inter-
than $400 billion in capital, and have mandates that American Development Bank.
encompass a range of initiatives other than infrastructure
development. Of course, this isn’t completely altruistic. China is
hoping that a good chunk of the infrastructure work will
• Review business processes at the ADB, IFC, be done by Chinese companies, to deal with its over-
EXIM, OPIC, and the World Bank, including implicit and capacity problem in heavy equipment manufacturing
explicit policies that constrain support for coal, hydro, and construction.
oil, gas and nuclear energy investments. The G24 and
G20 have both expressed frustration with the lack of We would like to think that these different efforts
movement on these issues (Runde 2015). may be complementary. As foreign policy expert David
Dollar opines in a paper in The Brookings Institute,
Developments a think tank: “The kind of infrastructure financed by
the Chinese initiatives is the “hardware” of trade and
Instead of joining the AIIB, the Obama Administration investment, which are necessary but not sufficient to
offered up another option to 11 countries in Asia: the deepen integration. TPP, on the other hand, represents
Trans-Pacific Partnership (TPP), although this “next the “software“ of integration, reducing trade barriers,
generation” trade agreement did not include China – the opening up services for trade and investment, and
region’s most important trading nation. China, in turn, harmonizing various regulatory barriers to trade” (Dollar
didn’t invite the United States to its version of the TPP 2015).
– the Regional Comprehensive Economic Partnership
(RCEP), a trade initiative which links 16 nations in Asia. Mr. Dollar observes that there could be “a risk that
the competing initiatives of China and the United States
Even U.S. allies, however, such as Australia and will lead to regional blocs and a disintegration of trade,
Japan, say the TPP intrudes too much into their internal but it is more likely that Sino-American competition will
affairs. The TPP requires more than tariff reductions lead to strengthened institutions and deeper integration
and gets involved with intellectual property rights, throughout Asia-Pacific”. We would like to think so too
data protection rules, corporate governance, labor and (Dollar 2015).
environmental standards, and financial regulations.
The“New Silk Road”: Background
Many major economies in Asia, such as Australia,
Singapore, South Korea, and Vietnam had stated they The New Silk Road plan, comprising both a land-
want to be part of both Chinese initiatives (the AIIB and based path and a maritime route, has been referred to
the ‘One Belt, One Road’) and the TPP (Dollar 2015). While as a Chinese national strategy ever since President Xi
TPP negotiations were completed and an agreement Jinping first broached the “New Silk Road Economic Belt”
was reached in early October 2015, it still faces a tough idea in his speech in Kazakhstan on September 7, 2013
and lengthy approval process in the US (Drezner 2015); (Shi and Yang 2014).
the Obama administration has stated, Reuters reports,
that it will work with the US Congress to ensure the The plan envisions an economic cooperation bloc
most appropriate timing in getting a vote in early 2016 from China through to the Mediterranean that revives
(Hughes 2015). the old Silk Road trading route. Bloomberg indicates
that according to a map published on the website
Together with the New Development Bank being of the official Xinhua News Agency in May 2014, the
founded with other BRICs economies, China now has land-based Silk Road starts from Xi’an, stretching west
the $50-billion AIIB, the $40-billion Silk Road Fund (or through Lanzhou and Urumqi before running southwest
OBOR Fund), and the $100-billion New Development
Bank, founded in cooperation with India, Russia, Brazil,
68
• Japan and the U.S. should seek a new capital and South Africa. And there are the individual Chinese
increase for the ADB or a special capital increase. The development banks, too – the China Development
ADB recently increased its lending by 40 percent, which Bank, which has $100 billion in capital, and the Export
is a positive development. However, Asia is facing a Import Bank of China. These banks already give more
projected $8 trillion infrastructure gap over the next loans to Asia and Latin America than institutions like the
decade. The ADB and World Bank together offer less World Bank, the Asian Development Bank, and the Inter-
than $400 billion in capital, and have mandates that American Development Bank.
encompass a range of initiatives other than infrastructure
development. Of course, this isn’t completely altruistic. China is
hoping that a good chunk of the infrastructure work will
• Review business processes at the ADB, IFC, be done by Chinese companies, to deal with its over-
EXIM, OPIC, and the World Bank, including implicit and capacity problem in heavy equipment manufacturing
explicit policies that constrain support for coal, hydro, and construction.
oil, gas and nuclear energy investments. The G24 and
G20 have both expressed frustration with the lack of We would like to think that these different efforts
movement on these issues (Runde 2015). may be complementary. As foreign policy expert David
Dollar opines in a paper in The Brookings Institute,
Developments a think tank: “The kind of infrastructure financed by
the Chinese initiatives is the “hardware” of trade and
Instead of joining the AIIB, the Obama Administration investment, which are necessary but not sufficient to
offered up another option to 11 countries in Asia: the deepen integration. TPP, on the other hand, represents
Trans-Pacific Partnership (TPP), although this “next the “software“ of integration, reducing trade barriers,
generation” trade agreement did not include China – the opening up services for trade and investment, and
region’s most important trading nation. China, in turn, harmonizing various regulatory barriers to trade” (Dollar
didn’t invite the United States to its version of the TPP 2015).
– the Regional Comprehensive Economic Partnership
(RCEP), a trade initiative which links 16 nations in Asia. Mr. Dollar observes that there could be “a risk that
the competing initiatives of China and the United States
Even U.S. allies, however, such as Australia and will lead to regional blocs and a disintegration of trade,
Japan, say the TPP intrudes too much into their internal but it is more likely that Sino-American competition will
affairs. The TPP requires more than tariff reductions lead to strengthened institutions and deeper integration
and gets involved with intellectual property rights, throughout Asia-Pacific”. We would like to think so too
data protection rules, corporate governance, labor and (Dollar 2015).
environmental standards, and financial regulations.
The“New Silk Road”: Background
Many major economies in Asia, such as Australia,
Singapore, South Korea, and Vietnam had stated they The New Silk Road plan, comprising both a land-
want to be part of both Chinese initiatives (the AIIB and based path and a maritime route, has been referred to
the ‘One Belt, One Road’) and the TPP (Dollar 2015). While as a Chinese national strategy ever since President Xi
TPP negotiations were completed and an agreement Jinping first broached the “New Silk Road Economic Belt”
was reached in early October 2015, it still faces a tough idea in his speech in Kazakhstan on September 7, 2013
and lengthy approval process in the US (Drezner 2015); (Shi and Yang 2014).
the Obama administration has stated, Reuters reports,
that it will work with the US Congress to ensure the The plan envisions an economic cooperation bloc
most appropriate timing in getting a vote in early 2016 from China through to the Mediterranean that revives
(Hughes 2015). the old Silk Road trading route. Bloomberg indicates
that according to a map published on the website
Together with the New Development Bank being of the official Xinhua News Agency in May 2014, the
founded with other BRICs economies, China now has land-based Silk Road starts from Xi’an, stretching west
the $50-billion AIIB, the $40-billion Silk Road Fund (or through Lanzhou and Urumqi before running southwest
OBOR Fund), and the $100-billion New Development
Bank, founded in cooperation with India, Russia, Brazil,
68
