NPC Meeting Touts New Silk Road as New Driver for Economic Growth

Justin Lin, a former senior official at the World Bank and member of the 12th National Committee of the Chinese People's Political Consultative Conference, spoke in favor of the New Silk Road solving China's "new normal" economic slowdown. (Credit: Xinhua)

China’s parliamentary showcase, the annual meetings of the National People’s Congress (NPC) and the National Committee of the Chinese People’s Political Consultative Conference (CPPCC), collectively known as the “two sessions,” took place in Beijing earlier this month and set the country’s governing agenda for the coming year. Most importantly, Premier Li Keqiang announced in his work report that the country’s GDP growth target for 2015 was “around 7.0 percent,” a continued slide from 2014’s 7.4 percent growth rate and a long ways from China’s accustomed nearly double-digit growth. A multitude of statements from senior Chinese officials at the two sessions suggest this slower growth, termed the “new normal” by the Chinese Communist Party’s (CCP) deft public relations team, can be solved—through the “New Silk Road” initiative.

First used in May 2014 and developed over the course of the year, Chinese President Xi Jinping explained at the November 2014 Asia-Pacific Economic Cooperation (APEC) summit that China’s economic “new normal” had three “notable features”: “First, the economy has shifted gear from the previous high speed to a medium-to-high speed growth. Second, the economic structure is constantly improved and upgraded. Third, the economy is increasingly driven by innovation instead of input and investment” (Xinhua, November 9, 2014). The consequences of China’s economic slowdown—a continued reliance on exports and manufacturing overcapacity—makes the New Silk Road perfectly positioned to function as the escape hatch to channel China’s excess domestic supply into overseas markets, in part by stimulating demand for those exact goods abroad.

Connecting the New Silk Road with China’s domestic economic development strategy in his speech at the NPC, Premier Li said, “We will integrate the development of the Silk Road Economic Belt and the 21st Century Maritime Silk Road with the development and opening up of related regions. We will promote development of the new Eurasian Continental Bridge as well as major coastal and border ports which serve as hubs for the Belt or the Road” (NPC, March 17). As the Global Times put it, “China’s ‘One Belt, One Road’ initiative could offer a new growth engine for the country’s economy as it enters a ‘new normal’ of slower yet more balanced growth” (Global Times, March 10). Zhang Yansheng, an academic under the National Development and Reform Commission (NDRC), said that “future growth […] will depend increasingly on the country opening-up less developed economies and a greater focus on developing China’s western regions, with the ‘One Belt, One Road’ initiative mapping out the vision for the road ahead.” Chan King-wai, chairman of the Hong Kong China Chamber of Commerce, added that “this will involve increasing exports of China’s capital and transferring overcapacity in sectors such as iron, steel and cement” along the route (Global Times, March 10).

Surveying Chinese economists during the two sessions, Xinhua positioned the New Silk Road as a new driver of economic growth. Zhang Yansheng, from the NDRC, said “the meaning of the ‘One Belt, One Road’ is a new way for China under the new normal to export capital to the Asia Pacific and Europe, and build a new structure of comprehensive openness that permeates Eurasia.” Li Yining, a Peking University economist who was a leading voice for privatization and taught Premier Li and other senior leaders, said that the Shanghai free trade zone (FTZ) can serve as a “promotable model” for the New Silk Road. Justin Lin, a former senior official at the World Bank, said that “under the new normal, China’s economy still has many growth drivers, and the infrastructure investment spurred by the ‘One Belt, One Road’ strategy is an important economic growth driver, and the investment in infrastructure for the ‘One Belt, One Road’ will create big market demand for cement, steel and aluminum”—three of the biggest industries facing overcapacity issues right now in China (Xinhua, March 7). A researcher under China Ocean Shipping Company (COSCO) added that the New Silk Road has focused investment on six regions, including Xinjiang and Jiangsu, in the shipping, construction, energy, commerce, tourism and comparative advantage manufacturing sectors (Xinhua, March 11).

Local officials also touted the New Silk Road as perfectly suited to their local economies, but also as a solution to their problems. The Party secretary of Sansha city, which administers China’s territorial claims in the South China Sea, said Sansha can play a role in the initiative as a “platform for cooperation” and as a “service base.” The mayor of Xi’an, the starting point for the Silk Road Economic Belt, called it a “new window” for opening up toward the west, while the Party secretary of Tibet cited the region’s role as a “main international thoroughfare” and called it a “historic opportunity” for the region’s development. The head of Shaanxi’s Development and Reform Commission said the New Silk Road gives the interior provinces access to new growth opportunities and will help China avoid the “middle income trap.” Reflecting, perhaps, the underlying goal of tying the New Silk Road to China’s future economic growth, the Party secretary of Kasghar, in Xinjiang, said the “‘One Belt, One Road’ is an important historic opportunity to safeguard social stability and lasting political order,” and People’s Daily inserted into the end of his statement “in ethnic minority regions” (People’s Daily, March 13).

Chinese companies facing a weaker economy at home are also jumping on the New Silk Road bandwagon to access new markets and follow the money from Beijing’s latest quasi-external stimulus. At the two sessions, Lenovo’s chairman proposed that “information technology infrastructure should also be an important part” of the initiative (Global Times, March 10). This is in part because, unlike China’s RMB 4 trillion ($650 billion) 2008 stimulus that was directed toward domestic infrastructure and led to massive waste and debt, the recently reported RMB 10 trillion ($1.6 trillion) spending plan is “focused on improving people’s livelihoods and on necessary infrastructure projects, especially those in the central and western regions, as part of efforts to implement” the New Silk Road (Global Times, January 8).

Although the New Silk Road transformed at the two sessions into a nearly catch-all policy, even reflecting President Xi’s “four comprehensives” and his “Chinese Dream,” China has already announced that it will release more details and specific plans for the New Silk Road at the upcoming Boao Forum in late March (Xinhua, March 7; China.org, March 11; Xinhua, March 16).