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Belt and Road can ease imbalance in globalization

By Huang Renwei
image0013The current problems brought by globalization are the result of contradictions between global productivity distribution and global production relations. After more than three decades of development, global productivity distribution has witnessed fundamental changes. Nowadays, developing and developed countries are jointly participating in the global industrial chain, supply chain and capital chain, which were once dominated only by Western countries. In spite of changes in global productivity distribution, there has been no change in the general global production relations, as those who control capital and high-end technology still work by the same rules as 50 years ago, causing a sharp contradiction at the current stage.
Globalization has led to a global shift in wealth, which, to a large extent, has seen wealth flow from developed countries to developing ones, leaving developed countries with a lower proportion of the profits. This smaller proportion of profits is chipping away at the two pillars of developed countries – the middle class and the social security system – and is also the root reason behind the black swan phenomenon in the West. Developed countries can neither adjust their own production relations nor adjust their superstructures, leading to the rise of populism and politicians advocating populism. But this cannot solve the fundamental contradiction in globalization.
China should seize this opportunity to take the lead in overcoming the contradiction between the new production relations brought by globalization and the superstructure. In this way, we will be able to take the initiative in obtaining strategic dominance. If the US fails to adjust its production relations and superstructure, the country will end up in a strategically passive situation during this round of globalization.
The “One Belt and One Road” (B&R) initiative is a major balancing measure that could address the serious imbalances generated by globalization. A major destructive factor that has exacerbated the globalization imbalances is hot money. Instead of flowing into the real economy, infrastructure or poor developing countries, trillions or even hundreds of trillions of global hot money goes wherever there’s a chance to make easy profits and then leaves. Wherever it goes, there are bubbles, and when it leaves there is a financial recession and crisis. And there is no way to solve this contradiction.
China, however, injects capital into infrastructure and developing countries. We use about 1 trillion yuan ($144.8 billion) to drive tens of trillions from around the world to infrastructure, the real economy and to developing countries, which is a great contribution to globalization. Although the B&R effect has not yet become that obvious, the US has realized that it would be a strategic misstep not to join the B&R. Undoubtedly, the B&R is the only bright spot amid the anti-globalization sentiment around the world.
China is both an initiative advocate and an executor, as well as being a truly competitive competitor. The country has a comprehensive comparative advantage in the infrastructure field, with capital, equipment, technology and manpower, and there is no other country that can grasp all these elements. In this sense, the B&R initiative is not only of strategic importance to us, but also beneficial to us from the micro perspective, thus offering great development room for Chinese enterprises.
In short, given the contradiction between global productivity and production relations, the B&R is a major step toward correcting the imbalances in globalization.
(The author is vice president of the Shanghai Academy of Social Sciences and a senior advisor with the Advisory Committee of the Pangoal Institution.
(Global Times)

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