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Silk Road progress ‘beyond expectations’, say officials

Updated: Aug 5,2015 9:49 AM     China Daily

Levels of economic and trade cooperation between China and partner countries along the Silk Road Initiative trade routes have been stronger than expected over the past six months, the Ministry of Commerce said on Aug 5.

Shen Danyang, the ministry’s spokesman, said the initiative’s progress and the effects so far had been “beyond what we had hoped”.

Latest figures show China attracted $3.67 billion in foreign investment in the first six months from companies along the Belt and Road, up 4.15 percent on a year-on-year basis.

Total outbound direct investment by Chinese enterprises reached $7.05 billion in the first six months, up 22 percent, the data showed.

But Shen said three sectors in particular have shown dramatic growth in attracting foreign capital during the period along the routes: Financial services (a 1,262.15 percent rise), leasing and commercial services (150.02 percent), and information transmission, computer services and software (116.54 percent).

The initiative, proposed in 2013 by President Xi Jinping, is a trade and infrastructure network that includes Silk Road Economic Belt through Central Asia to the Black Sea, and the 21st Century Maritime Silk Road from the South China Sea, through the Strait of Malacca, across the Indian Ocean to the eastern Mediterranean via the Red Sea.

The biggest rise in investment from a single country along the routes was from Poland (a 3621.92 percent increase), followed by Saudi Arabia (697.27 percent), the Slovak Republic (196.67 percent), Malaysia (135.51 percent) and Russia (129.36 percent).

Shanghai, Jiangsu and Shandong provinces attracted the most investment from Belt and Road countries, accounting for a respective 22.24 percent, 16.04 percent and 7.84 percent of the total capital.

Chinese enterprises, meanwhile, have made direct investment in 49 countries along the Belt and Road, mainly in Singapore, Indonesia, Laos, Russia, Kazakhstan and Thailand.

Sang Baichuan, director of the Institute of International Business at the University of International Business and Economics in Beijing, echoed Shen’s view that progress as a result of the Belt and Road had been better than expected.

“The Belt and Road Initiative, based on an alliance of mutual benefit, provides new opportunities for China and its trade partners along the route, helping boost cooperation in diplomatic exchanges, infrastructure, inter-connectivity, the economy, trade and investment,” said Sang.

Against the wider backdrop of an unstable global economy, he said the initiative had been able to forge important overseas links and expand the flow of goods, services, people and capital, meaning China has acted as a catalyst for international growth and development.

Falling commodity prices to boost growth

The decline in global commodity prices could prove a significant boost to China’s faltering economic growth, the Ministry of Commerce said on Aug 5.

“The average price of China’s imports dropped 10 percent during the past six months while the country’s exports remain equal in comparison with export values last year,” said Shen Danyang, the ministry spokesman.

“But global declines in the prices of imported commodities have substantially reduced the production costs of some domestic enterprises, and the terms being negotiated for foreign trade have also been substantially improved.”

With global commodity prices expected to remain weak in the second half of the year, Shen said China is expected to continue benefiting.

The ministry said that the import prices of eight key categories of commodities had declined, including crude oil, plastics and soybeans, resulting in a total reduction in costs worth $76.95 billion in the first half.

Li Jian, a researcher with the ministry’s international trade and economic cooperation institute, said: “The price decline for imported commodities, especially for China, the world’s leading consumer of raw materials, has helped improve the economic performance of Chinese enterprises.

“We believe the super cycle in commodity prices has now come to an end, and the bull market in commodities, running since 1999, has gradually faded just as China’s economic growth pace has slowed over the past few years.