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New Opportunity for the World

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Jiri Paroubek, Former Prime Minister of the Czech Republic; Former Chairman of the Czech Social Democratic Party.[Photo/China.com.cn]

Name:

Jiri Paroubek, Former Prime Minister of the Czech Republic; Former Chairman of the Czech Social Democratic Party

Title: The Belt and Road Initiative-New Opportunity for the World

Full Text:

Ladies and gentlemen,

thank you for inviting me to a conference with such an exceptionally interesting subject.

For the past few decades, China has been tenaciously and successfully strengthening its economics. First, the growth was two-digits, and even now, as the growth rate has stabilised just under 7 percent, it is still admirable.

We are currently witnessing a great transformation of economy, power and wealth in the world. This connects to a dynamic growth of influence of new world powers in global economics and politics. In the second half of the twentieth century, the Western states and Japan commanded 75 percent of world wealth. Presently, it is less than half of the world GDP. And the share has been continuously decreasing. By contrast, China has been the largest world economy since 2014, measured by GDP at purchasing power parity. There is no need to waste words on China`s phenomenal success, let me just say, that it is truly spectacular.

The BRICS association (Brazil, Russia, India, China, South Africa), in which China is the strongest country, is altogether expected to reach the economic level of the G7 countries by year 2032.

As a result of this, the balance of power in the world is shifting and will continue to shift. After the break-up of the Soviet Union, a quarter century ago, we witnessed an unprecedented growth of global influence of a single superpower, The United States. This hegemony of one power - the USA - is gradually diminishing.

In this chapter of world development, it is clear that the interests of the USA are clashing and will continue to clash with those of new world powers led by China, which are vigorously promoting their own agenda. The end of a unipolar world dominated by one superpower - the USA - is accelerated by, besides other things, the impact of the financial crisis, launched by the collapse of large American corporations in 2008. The bankruptcy of a single powerful American financial corporation - Lehman Brothers - directly caused the loss of 613 billion $.

25 years ago, it seemed that the hegemony of the USA would last much longer. However, China dealt with the recession more successfully than the West, including the USA. What was it that caused this dominance of the USA? Allow me to introduce five factors:

1. The opening of global economy, liberalization of world trade and free movement of capital.

2. After the collapse of the Soviet Union and the ending of the Cold War, it was the limitation of arms race with Russia and the development of bilateral relations with China. In the case of Russia, however, western politics leading to improving relations, is no longer a priority. The West has again begun to invest in its military. In the USA, the state expense on the army has grown and is now more than 600 billion $ per year, which is used to accelerate the economy. This, however, is only possible thanks to a large inflow of capital from other countries to the USA and also by printing a large volume of US Dollars by the Federal Reserve Bank. A different country would not be capable of such fiscal politics.

3. The USA have maintained the existence of NATO even after the collapse of the Soviet Union. Between the years 1999 and 2004, the Alliance has accepted 12 more states in Central and Eastern Europe and expanded its influence closer to the Russian border. There is a tendency to expand NATO even further and include Ukraine, the Balkan states and Georgia in the Western sphere of influence.

4. The closest ally of the USA - the EU - currently includes 28 European countries. It is a powerful unit with 500 million inhabitants, meaning a great market potential. It has its own currency and joint institutions, yet a tiny collective budget and so far weak European authorities. Today, the EU is dealing with the limitations of further integration, which will be difficult to overcome. The United Kingdom is leaving the EU. On the contrary, the United States have a gigantic federal budget, a powerful army and a consistent foreign policy.

5. In the last 25 years, the United States have learned how to use the potential of the UN to carry through their own strategic interest in the world. This allowed the USA to intervene in the world in the 1990s with the support of their constant and ad hoc allies, first in Yugoslavia, then in Afghanistan, Iraq (twice) and other places, with or without the UN mandate. During Obama`s presidency, the USA have started to abandon the role of the “world police”. These interventions - with the exception of Yugoslavia - have, in essence, been political failures. The original goals of such interventions were not - and could not be - accomplished.

The unpredictable presence of the West, especially in Libya and Syria - of course, in Syria with great involvement of several regional players (Turkey, Quatar, Saudi Arabia) - triggered the mass migration of refugees from Asia and Africa to Europe. Today, Europe is in the throes of a migration crisis. The disintegration of Libya and in particular Syria and Iraq also accelerated international terrorism. This influences Europe and other areas.

In this situation of economic weakening of the West, the failure of its great military intervention, migration crisis and real risks of massive terrorist attacks on targets in the West, China dedicated its time to hard work, particularly the reinforcement of its economy. If the USA and the European members of NATO invest an astronomical 800 billion $ annually in its military, China is more restrained. Its investment in the military is an estimated 150 $ per year.

Frankly speaking, to invest money in arms is, to a large extent, to throw it out of the window. China maintains its spending on the military on a rational level. The West`s spending is definitely exaggerated. Think about how many useful projects could be carried out in developing countries, if the West spent the same amount as China on the military. How many pressing problems in the world could be solved very quickly, for example combatting droughts, supplying drinking water to the thirsty, building the necessary roads and railways in developing countries, etc.

These past years, we have been witnesses to a new era, in which China enters the established world order with clear ideas. These are, very often, incompatible with those of the West, especially the USA. China`s influence in international institutions such as the International Monetary Fund and the World Bank, is at present marginal, and it does not reflect the weight of its economy and there is no indication of the West`s willingness to change this. For a long time, China was not part of any alliances. This has, however, quite significantly changed. China, Russia, India, Pakistan and practically all Central Asian Countries, are part of the Shanghai Cooperation Organization. It stands as an Asian counterpart to NATO. This organisation is an important guarantee of safety in Asia. Also, in the 2009, BRICS was established, and with the inclusion of South Africa in 2011, now has 5 members. Shanghai Cooperation Organisation certainly is not an alliance in a western understanding of the word ‘alliance’. Individual states including China respect the partnership character of the Organisation without any hegemony. It is a peace project.

BRICS countries have attempted to cooperate on the basis of a consensus, and have created a new ethics of partnership. This was most apparent during the establishment of BRICS Development Bank with beginning capital of 100 billion $. Although the member countries differ in economic power, their influence within the bank is equally represented by yearly rotation of the countries` delegates in the Bank`s highest ranks.

China has also fully exhibited its capacity to revise current economic world order by establishing and heading the Asian Infrastructure Investment Bank (AIIB). Today, the AIIB is a meaningful alternative to the financial institutions of the West. The Bank`s capital is on its way to reaching 100 billion $. China is the largest shareholder, followed by India, Russia, Germany and South Korea. Of course China is a part of the existing international system. China benefits, develops and brings new quality to the system.

In establishing this Bank, China confirmed its ability to be a “global financier and investor.” The Bank has, so far, provided financial aid and credit for infrastructure investments in Africa (5 billion $), Latin America (35 billion $), Central and Eastern Europe (10 billion $), Venezuela (20 billion $) and Pakistan (46 billion $).

What makes the AIIB incredibly interesting is the fact, that its participants are the largest EU economies (Germany, United Kingdom, France, Italy), but also key Pacific allies of the USA, South Korea and Australia. In total: sixty countries. The true 21st century project, however, is the development of new “Silk Roads”. This strategy was declared by the Chinese President in 2013.

The Silk Road Economic Belt includes the northern branch from China, via Kazakhstan, Russia and Poland, to Western Europe. The southern branch leads from China, via Iran, Iraq and Turkey, to the Mediterranean.

The so called 21st Century Maritime Silk Road should lead from the Chinese coast, southward to Indonesia and then west via Singapore, South-Asian countries, Kenya in Africa, through Suez to Greece. So far, 40 billion $, which could in the future grow to 1 trillion $ and involve 60 countries. This grandiose project has several ambitious goals. China wishes to maintain its high economic growth rate and for this it needs to widen the focus of its economy more to the centre and the west of its state territory. These Chinese regions - such as the Xinjiang province with 160 million inhabitants - contribute to the national GDP less than eastern or coastal provinces. Of course, other natural partners for western Chinese regions are India, Pakistan and the countries of Central Asia.

Creating the necessary infrastructure (roads and railroads) from western China will open other Asian countries, which China has a deficit, to commerce. This will, of course, strengthen the Jüan`s position as one of the main currencies in the world.

Building necessary infrastructure from the Chinese borders to the west, meaning in Central Asia, Russia and elsewhere including East Africa, and the influx of necessary investments, will strengthen the economies of all the countries surrounding the Silk Road. And a more efficient economy of said countries and regions will increase the standard of life of their inhabitants. This will lead to the development of the middle class, which normally has the tendency to stabilise the situation in its country. It is estimated that by year 2050, the number of people in the so-called middle class could reach 3 billion. This will be an excellent factor in increasing the purchasing power of the inhabitants and provide new impulses for the growth of production and services. Meaning, economic development of these countries, the entire region and the world.

The reinforcement of the economies of these countries and their dynamic progress will cause them to focus on their own economic growth, prosperity and cooperation, and will also lead to the elimination of tension and conflict between states. Therefore, it will lead to better safety in a large part of the world

Simply put, the projects of Silk Roads will enable faster economic growth in many countries in Asia and Europe. And that will be the impulse to strengthen world economy as a whole. Those, who are interested in business, work hard and are concerned with their own prosperity, do not enter wars. And that is another valuable contribution of the Silk Road projects to the world.

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