Silk Road Economic Belt: Together towards Better Future

he initiative of the Silk Road Economic Belt made by President Xi Jinping in September 2013 has gained a lot of attention and interest from the governments, business community and academics both in China and beyond due to its scope and content, targets and perspective. This is, in fact, a novel concept of development when China has entered a new phase and the world is experiencing the next wave of regionalization.

For the three decades of its development, China has passed the primary stage when the growth has been stimulated through the accumulation of foreign currency and attraction of foreign investment. Now, as a fully open economy, China needs its business to enter the global markets and participate more actively in the global competition.

However, this new wave of regionalization is, in fact, contrary to the global trend of globalization. China's neighbors are excellent examples of this. The countries of Southeast Asia are united in a close economic union. China's participation is limited to the free trade area in the formats of ASEAN+China and ASEAN+China +Japan+Korea. New Zealand, Brunei and Singapore initiateda a strategic partnership that, due to the membership of the United States, was transformed into the Trans-Pacific Partnership (TPP). The TPP membership, since then, has been expanding considerably. In Eurasia, Moscow initiated the Customs Union of Russia, Belarus, and Kazakhstan that, after the election of Vladimir Putin in 2012, has grown rapidly into the Eurasian Economic Union. The European integration, namely the EU, which after joining of Croatia in 2013, constitutes of the twentyeight members, is the most apparent example of this trend.

This is the context, China started to adjust its policy towards more openness in order to strengthen the mechanisms for multilateral regional cooperation. In the Asia-Pacific, the fo cus is on the free trade zone of China, Korea and Japan. In Eurasia, the major direction is the Silk Road Economic Belt aimed at considerable increase of regional economic cooperation.

The Silk Road Economic Belt stipulates not only for the joint participation and mutual benefit

but for the action plan to achieve this benefit. The major elements of the action plan are infrastructure development, expansion of trade, industrial cooperation, closer economic ties; all these are based on agreement on regional economic cooperation. This is the logic of the purely economic component of the Economic Belt project.

Moreover, mutual understanding is also needed in many other areas such as culture, religion, history, etc. Apparently, these were the grounds for China to articulate the need for cooperation in the field of politics, and to stress the intercon nectedness, liberalization of trade, use of national currencies and mutual understanding among the peoples as significant areas for consideration.

The Silk Road Economic Belt opens more opportunities for cooperation for the parties concerned. China and Russia, as the two key powers in the Asia-European region, shall play the crucial role. First of all, the comprehensive strategic partnership between China and Russia is a fundamental factor for the success of the Silk Road Economic Belt. The both states are interested in closer economic ties. Chinese Silk Road Economic Belt initiative opens up new opportunities for cooperation as it is aimed at the development of infrastructure, trade and industrial cooperation.

In fact, the project suggests a new model for regional cooperation that is about the combination of Silk Road and Economic Belt. This model is very adequate for the contradictory global tendencies of simultaneous globalization and regionalization when economic relations among countries are growing and their interdependence is increasing significantly.

The crisis, on the other hand, impacted all countries making the issues of protection against economic risks even more relevant and forcing the governments to take protectionist measures in international trade.

The Silk Road Economic Belt connects the fast-growing economy of Asia-Pacific and the technologically advanced Europe through the resources-abundant countries of Central and West Asia. The latter is the region of rapidly growing trade and investment. The Silk Road Economic Belt shall be able to remove the existing barriers, create more favorable conditions for multilateral cooperation that ultimately will be beneficial for all participants. China and

Russia, as major powers in the region, may be able to make joint efforts to contribute to development of the region.

Moreover, China and Russia are implementing a number of infrastructure projects, namely the Transcontinental Railway connecting directly Asia with Europe. Russia is interested in the railway project. The Silk Road should proceed from China to Moscow through Kazakhstan and then go towards Minsk and St. Petersburg. Theoretically, it may go through the other Russian cities such as Kazan and Orenburg. These, obviously, stimulate Russia’s willingness to participate into the project. Deputy Minister of Transport Nedosekov, speaking at the International Forum on Construction of the Western Europe-Western China Transport Cor- dor, noted that transcontinental transport projects are aimed at the revival of the Silk Road. Russia intends to allocate to the project up to 80 billion rubles.

Russia’s participation could help to attract huge investments that would benefit other sectors and industries similar to the impact the Trans-Siberian and Chinese Eastern Railway made in their time. The Russian cities of Omsk, Novosibirsk, Krasnoyarsk, Irkutsk shall become the main beneficiaries from the project as the infrastructure in these cities will be improved as well as the other industries such as finance, logistics, trade, industrial production, even education and health care.

Finally, the implementation of the project may result into transformation of the cities, which are located along the route, into free trade areas.

The Sino-Russian cooperation in the Silk Road Economic Belt framework is very signifi cant for the region of Central Asia. In particular, the parties would be able to find a common ground between the Silk Road and the Eurasian Economic Union. Currently, the EEU is being consolidated in Central Asia. To realize fully its potential, this multilateral structure needs time. In the meantime, there are some problematic issues: for example the exporters from Kazakhstan are experiencing some difficulties

in accessing the Russian market. At the same time, Kazakhstan business faces serious competition from Russia. We believe, the Silk Road Economic Belt and the EEU could complement each other by providing assistance to the countries in the region in such areas as finance, project implementation and customs.

In the long-term perspective, it is clear that cooperation within the Silk Road Economic Belt is hugely beneficial for China, Russia and the

Central Asian countries in terms of the positive economic impact that may be made via enhanced cooperation in infrastructure, commerce, and industry. The success, however, is dependent on the ability of the participants to reject the outdated geopolitical stereotypes.

As for Central Asia, the countries of the thei region are currently entering into a new stage of their development with new risks and challenges. It requires stimulating of the economic growth through attraction of foreign investment. At the same time, it is vital for the Central Asian countries to maintain a certain balance between the major powers. The Central Asian countries are set to maximize their gains from cooperation with China and Russia. The economic projects by China are not contrary to the national interests of the Central Asian states; therefore, they shall be welcomed.

Kazakhstan, as a major regional power, has an important geopolitical position in the economic zone of the Silk Road and is a key partner of Russia in Central Asia. Kazakhstan's membership in the Customs Union and the Eurasian Economic Union does not affect negatively the Sino-Kazakh economic cooperation. This is an example of the pragmatic approach of the countries of Central Asia that is certainly a big advantage for the Silk Road Economic Belt.

From the Chinese perspective, the institutionalization of cooperation would be premature. Once Vladimir Putin initiated the EEU, Belarus and Kazakhstan as well as Kyrgyzstan and Tajikistan responded positively. Therefore, it is reasonable to assume for Beijing that its neighbors in Central Asia are not likely to seek institutional formalization for their cooperation with China. Currently, the transport projects are the most realistic.

In 2014, Beijing established the special fund for the Silk Road Economic Belt and is planning to invest into the projects of transport infrastructure in Central Asia through the newly established Asian Development Bank. This means that the Silk Road Economic Belt is gradually coming into reality.

In conclusion, it is worth noting that there have been significant changes in the relations between China and Kazakhstan in terms of implementation of the transport corridor projects. A joint logistics base was launched in May 2014, which is the first of its kind in the region.

On November 11, 2014, President Nazarbayev of Kazakhstan addressed the nation with the new Nurly Zhol – Towards the Future Program that is aimed at increase of the transportation and transit capacities of the country and considerable investment into improvement of infrastructure and transportation services.

On December 14, 2014, Prime Minister Li Keqiang, speaking at the Forum of the Chinese-Kazakhstan Business Council, said that China is willing to support the projects within the Nurly Zhol. Thus, the implementation of both the Silk Road Economic Belt and Nurly Zhol is mutually beneficial for the peoples of

Year: 2015
City: Almaty