Heartland-to-heartland linkages sought in China-driven industrial superproject

12th December 2017 By: Schalk Burger - Creamer Media Senior Contributing Editor

The China-driven superproject, the Belt and Road Initiative (BRI), which is a conceptual redevelopment of the ancient global tradeways of the Silk Road, aims to link the heartlands of countries by land, sea and air routes, said Renmin University School of International Studies Professor Wang Yiwei on Friday.

Starting with the Chinese heartland provinces, the initiative intends to spearhead development through the largest landlocked country Kazakhstan and then on towards Russia and Europe, as well as to India, the Middle East and Africa, and along existing regional air and sea trade routes in Asia, he said at the University of the Witwatersrand- (Wits-) hosted colloquium on Chinese Engagement with Africa.

The development of a series of economic and mobility corridors was also part of a realignment and rebalancing of global trade and business ties and sought to place China at the heart of the BRI, he explained.

Wits deputy vice-chancellor Professor Zeblon Vilakazi said the One Belt, One Road initiative, as it was also known, was part of a wave of Chinese outward investment framed as an overland industrial corridor to enhance connections between Asia, Europe and Africa and form a transregional trading system, with Africa as one of the hubs.

African and Chinese academics at the colloquium on Friday provided examples of a range of challenges and opportunities presented by the megaproject, especially for Africa, and how it could effectively negotiate, leverage and align such a project to its own developmental objectives.

Kenyan development economist and independent consultant Anzetse Were gave examples of challenges and opportunities, including that investment in Africa as part of the initiative would be focused on East Africa owing to its node position along the trade routes, and that skewed investment flows might cause tension between countries in the region.

Nonetheless, there is a need for regional blocs to establish firm collective negotiating positions to ensure they can include their own infrastructure and developmental objectives in the short- and long-term plans.

“If not carefully managed, the BRI could be another conduit for expensive infrastructure and saddle poor regions with debt. African governments will have to negotiate cost-efficient financing based on their own goals and plans.”

Competition is another challenge, and African private sector companies might be displaced by more efficient international entrants unless the skills and the use of relevant equipment and new technologies are in place to enable effective competition, Were said.

“Africa needs to leverage the BRI to improve export penetration and to upskill and capacitate local firms to move up the value chain. Issues of protection must be addressed, including how to protect key local industries until they are capable of competing on a global level, similar to the Asian miracle economies,” she added.

The opportunities presented by the BRI include, besides others, better integration of local enterprises into regional and global supply and value chains, enterprise development, growth and continuous local participation in infrastructure development and faster infrastructure development.

University of Tshinghua Carnegie-Tshingua Center for Global Policy Professor Tang Xiaoyang spoke about skills transfer patterns and noted that the topic was important for the broader BRI, as it was aimed at promoting development, and especially industrial development, along the routes.

Noting the different training and knowledge transfer models, including vertical inter-industry value chain training and horizontal industry-specific training, he highlighted the practical training model, called learning by working, that was used in Ethiopia to improve its textile manufacturing, which saw employees trained by foreign partner firms.

However, while this model did support a growth in industrial and export activity in Ethiopia, there was a need to ensure that the skills learned were those expected or needed by the employer, which in some cases caused the skills transfer to be viewed as ineffective, said Tang.

Other shortcomings of practical training skills transfers include that it might take up to five years for a person to learn a trade and that employment churn and movements lead to lost training investments.

Meanwhile, Wits Spatial Analysis and City Planning South African research chair Professor Philip Harrison noted that a project as bold as the BRI evoked fascination and anxiety and said China was conscious of how the initiative was perceived.

Reflecting on different perceptions of Chinese global political and trade relations, Tang said: “The BRI is based on China’s own successful development model and informs the engagements with our trade and development partners. The ‘no strings attached’ policy does not mean that China does not propose various training and infrastructure development models, but rather that it does not impose any political requirements on the partner country.”

“Multiparty democracy was not helpful for the Chinese development experience and stability was more important for its development,” he added.

The model lifted 700-million people out of poverty over 40 years, Wang emphasised.

“Infrastructure is a precondition for industrialisation. Infrastructure design and development based on comparative advantages and industrialisation was the way China brought hundreds of millions of people into the middle class. The BRI is part of China’s goal of promoting industrialisation around the world. Part of the model includes industry clustering, which crowds in and accelerates investment,” he explained.

“The BRI is experimental and offers the opportunity for influence from within Africa to address concerns of competing developmental objectives around the extent of the BRI and how it will enable or inhibit progress towards developmental goals,” stated Harrison.