June 18, 2015


"New Chinese Dragons": a Global Economic Alternative Is Being Born

Recently, the Asian Economic Forum opened its doors on the Chinese island of Hainan. At the opening ceremony of the “Asian Davos”, the Chinese leader made known the first achievements in the case of restoration of the “Silk Road”. At least 60 countries have announced about their desire to participate in the project, started in 2013. “Creation of the “Economic Belt of the Silk Road”, the “Marine Silk Road” and the Asian Bank of Infrastructure and Investment — these are open to everybody projects,” said the Chinese leader Xi Jinping. The United States have ignored the project, but the Europeans have decided, after much hesitation, to support it.

As reported Euronews, the leaders of the USA and Japan in April said that they had made some progress on the future of the Pacific Trade Agreement providing for the abolition of restrictions on US and Japanese goods. Another 10 Asian countries, excluding China, are ready to join it. It is argued that such progress is a result of implementation of China's global economic initiatives and marks the challenge to the Western economic and financial system on a global scale.


The Context of the “New Chinese Challenge”

Deng Xiaoping (1904—1997):
“It does not matter if a cat is black or white, so long as it catches mice”

As early as in 1973, Deng Xiaoping (the author of the “China’s economic miracle”) uttered the phrase that became winged: “It does not matter if a cat is black or white, so long as it catches mice”. But real progress in the economy and foreign policy were the basic foundation for the Communist Party of China to achieve its legitimacy. However, the state of affairs of recent years shows that today... “the cat is not very good at catching mice”. That is, a model based on the close relationship of politics, economics and the international situation is becoming ineffective. We know little about the leader of China Xi Jinping. It is believed that he is a representative of the conservative part of the Chinese leadership, flirting with moderate nationalism, is doing everything to strengthen China, its economic and political dominance in East Asia. And the Chinese leadership's immediate task, as before, is to ensure sustainable economic development of China.

Historically, the basis for international policies of the PRC is as follows: a) the traditional China-centrist idea of ​​China and its place in the world; b) the system of Chinese stratagems; c) philosophical-ethical and ideological positions of Confucianism, Daoism, Buddhism, doctrines of “harmonic order”, tractates of outstanding thinkers (Tae Hun, Sun Xi, Wei Lyaotszi, Juan Shiguana, Lee Veygun), whose philosophy, as well as the current research of the “new Chinese challenge” will be mentioned by us further on.

A significant change in China's approach to the implementation of various aspects of foreign policy has become a noticeable trend in recent years. If in the political-security sphere such significant changes include the adoption of a new anti-terrorism law allowing Beijing to military intervene abroad in case of a threat to the Chinese or the country's interests, then, by analogy, the updated means and methods of implementation of international economic policy are becoming part of China's foreign policy. What is the reason for changes in attitudes?

The Chief Economist at HSBC in the PRC Qu Hongbin points out: “The economic system is getting complicated in the era of globalization, the cause and effect relationships in it are so complex, that to track them is a difficult task. Today, what happens in one country affects the whole world, and vice versa.” This is particularly evident in China's economy. On the eve of the 18th Congress of the CPC, the journal “Syuesi Shibao” published an article by the former Deputy Chief Editor of the Chinese Financial Times, Deng Yuwen under a remarkable title “Hu-Wen's Political Legacy”. It begins with the traditional list of successes of Hu-Wen tandem's 10-year in power. In particular, the author believes that by the volume of its economy China is the second largest and is one of the countries with an average income. China has proposed the ideas and positions regarding the new world order; strengthened its international position and influence, as evidenced by the emergence of a “Chinese model” and the concept of G2, as well as has increased the state power and authority of the Chinese voice in international affairs. The significant strengthening of China's positions in the world is the first reason for the change of its approach to the realization of its global role.

Strengthening the role of China in the world economy in 2020 (forecast)

The growth of Han nationalism in the country, especially among the youth, has become an important element of social-political processes in modern China. In China, openly and in large editions are published works, which state that the country should actively, including with the use of the Army and Navy, defend its economic interests throughout the world, and even control the world's resources and their distribution. And if earlier at the official level, this policy did not receive the approval, the new generation of Chinese leaders is likely to have to reckon with the emerging reality. That is, the internal socio-political transformation is the second reason for the changes.

The third reason for the changes in approaches are the trends in the development of China's economy. In recent years, the Chinese economy has been “dragging” the whole world after it. Becoming thus a kind of “factory of the world”, it has filled it with cheap goods. However, over time a source of cheap labor is getting exhausted, wages of the already involved in industrial production workers increase, China's investment attractiveness “flows” into more dynamic neighboring Asian countries. China is more and more approaching the so-called “Lewis turning point”.

The worsening trade balance as a result of lower demand in export markets, removing of transnational corporations from China, strengthening of internal imbalances (city-village, East-West) and several other structural problems have led to the fact that the foundation of China's strategy since 2008 has become the shift to domestic demand. CSDCC Manager in Shanghai Simon Jiao points out: “In China, there is an understanding of the needs of transformation of the economy to domestic demand, but there is no mechanism of this transformation as a result of a comprehensive and key control of the state.”

The Rector of the Institute of International Relations of the Beijing University Wang Jixi subtly stresses that China is now striving to become daguo (big state), qianguo (powerful state), and fuczego (responsible state). This evolution of the Chinese system is an indispensable tool for achieving syaokan (small welfare), shengping (formation) and datong (great calmness). In China, they realize that the main international threat in this way is the hegemony of the United States, and therefore they have begun implementing China's stratagems.

The Swiss scientist Harro von Senger has formulated 36 major Chinese stratagems (the historically formed methods and principles of foreign policy activity) that can be observed in today's “politics” of China (“to kill with someone else's knife”, “to calmly wait for the enemy's getting tired”, “to rob during the fire”, “to pull something out of nothing”, “to hit on the grass to frighten the snake”, “to lure the tiger from the top of the mountain onto the plain”, “to fish in troubled waters”, “to get united with the distant enemy to defeat the neighbor”). With the help of all these methods, modern China implements (as it has been officially voiced by the Minister of Foreign Affairs), a multi-polar transformation of the world. This idea, in conjunction with others forms China's current international economic policy.

Along with “BRICS fellows”, China has once again proposed to change the ratio of the votes and distribution of shares in the capital among the members of the IMF according to their real economic weight. In its attempts to challenge the US-European dominance in the world, “Great China” has tried to build economic space in different ways (free trade zones, customs unions, ASEAN + 3, the projects for “Yuan currency area” and so on). As the First Deputy Director of the Institute of Far Eastern Studies RAS, Professor of Moscow State Institute of International Relations of the Russian Foreign Ministry Sergei Luzyanin points out, it (China) has applied a new strategy: “To rely on the North, to stabilize the West (the USA and EU), to go to the South (Asia, Africa, Latin America)”.

But it was not enough. The concept of “harmonious world” has two purposes: to open markets for Chinese products and to persuade the states that China's foreign policy is peaceful. In an effort to create a legal foundation for a strategic partnership with the EU and to delimit the zones of economic interests, China went towards the creation of macro-regional and trans-regional trade and economic blocs and projects. That is how the “Silk Road” and the Asian Development Bank of Infrastructure and Investment have become reality.


The “Silk Road”: China's Economic and Image Project

Based on estimates of Associated Professor L. A. Ukrainets, given to the Information-Analytical Center of the Faculty of International Relations Franko National University of Lviv, China's global economic initiatives are another Integration System. The ambitious idea of ​​creating a “Silk Road” (or a similar structure) has long been in the air. It is somewhat strange why China, with its economic might had not tried before, even before 2013, to initiate something like that. This project has been repeatedly compared with the Marshall Plan — the comparison is not absolutely correct, but it is correct in some aspects, given that the current five-year plan in China is aimed at eliminating the threat of “overheating” of the Chinese economy. Having directed the excessive “pressure” into the infrastructure of neighboring countries (and for China's neighbors infrastructure issues are relevant enough), China receives a number of additional foreign and domestic economic and geopolitical bonuses. In fact, it turns into a driver of Eurasian integration. Despite the eventual difficulties, it can be assumed that the project of a new “Silk Road” is being step-by-step implemented in practice. If nothing else, the proof of this is the high-speed train from China to Spain. No matter how unpleasant, but on its route, it bypasses Ukraine, having preferred Belarus. Now we do not fit into the new field of integration and actually lose the opportunity to benefit from this project.

Based on the conclusions of the Associate Professor N. V. Gorin, which she made as a result of the analysis and gave to the Information-Analytical Center of the Faculty of International Relations of the Franko National University of Lviv, the creation of the “Silk Road” is an ambitious, costly and long-term project. For China, this project will have a lot of positives. First of all, it will continue strengthening it on global markets (along with access to new markets), ensuring the positions of the world's leading exporter, solving the problems of overproduction and “overheating of the market”, which create a threat to the PRC as a result of slowing the economic growth. Due to the construction of modern transport routes and interchanges, China will optimize its logistics chains and this will reduce the cost and expedite the process of commodity supplies. The Chinese argue that they do not have enough railways, sea routes, optimal schemes of reloading and loading in the ports. In general, this project will improve the investment infrastructure on a global scale, access to markets and the world's best infrastructure. This is the mechanism of better, more profitable and cheaper Chinese exports. The project will partially solve these problems and will bring China into first place in world trade, and getting domestic investors involved in the implementation of the project will provide an opportunity for China to receive additional dividends and to align the processes of development in its regions.

The importance of the “Silk Road” is confirmed by the fact not a single country which received the proposal, has refused to participate. All countries are seeking to benefit from the project (especially Kazakhstan). But despite the fact that this project will ensure the development of transport and logistics infrastructure in the countries where they will set up an economic and Marine Zone (mostly developing countries), in the first place, it will strengthen the role (will ensure the dominant position) of China, not only in the region, but also in the whole world. That is, the key economic benefits of the project will be got by China. This way, China is likely to come to the first place in the world trade as an exporter and importer (now it is in the second place). China's becoming the leader in exports will be a sign of yuan's pushing the dollar off the leading position.. It is therefore strange that China had not tried to realize this project earlier.

For Ukraine, it is important not to stay away, but to participate in the development of international transport corridors. The development of modern transport logistics infrastructure, as well as of strong communication and transport nodes, logistics chains — all this will allow Ukraine to take its rightful place in the world economy. At first, Ukraine, unfortunately, turned out to be on the side of this road. Although all is not lost, and it would really help in the development of the state. Now European transport corridors go through Ukraine, and it is important to take advantage of intersections of these roads. Investment in modern transport logistics infrastructure ensures significant dividends in the future.

The “Great Silk Road” was one of the oldest global trade routes in Eurasia

Professor of the East Asian Institute John Wong points out that the “Great Silk Road” was one of the oldest global trade routes in Eurasia. Actually, it was a tool of China's peaceful expansion of its economic and cultural influence on other countries. In Beijing, they want it to also become a major factor in promoting their increasing economic power simultaneously in several regions. Vice-President of the Institute of Modern Transportation of the National Development and Reform Commission of the People's Republic of China Wu Venhua stresses that the project will strengthen China's economic ties not only with Europe but also with Africa and Arab countries. Deputy Chief Editor of The Diplomat Shannon Tiezzi specifies that the “Silk Road” will create a massive loop that will connect three continents. This project should be a trump card with which China will improve its image. It will also be one of the most important aspects of China's economic diplomacy.

China is not just solving international problems. The PRC's authorities are promoting the transfer of production from rich eastern regions to central and western ones, where wages are still quite low. Besides, investment into Central Asia will provide an opportunity to create jobs and in a certain way to stabilize the region, closely related to the most vulnerable point of the PRC — Xinjiang Uygur Autonomous Region.

In fact, Xi Jinping has voiced the idea, valued at 40 billion US dollars as a budget of the fund of the “Silk Road.” China is one of the few countries that can afford it, because it has accumulated a large amount of financial assets. China also has the resources, equipment and technologies, with which quite a global infrastructure can be created. I mean proper modern high-speed roads. Along the new high-speed motorways there will be new regional centers, the capacity of logistics will expand, tourism potential, the internet will develop, and new jobs will be created. This, in its turn, will contribute to the real diversification and decentralization of the economy and the full development of the regions. Apart from the development of rail and sea traffic, the project also includes introduction of common rules and standards, and will eliminate the obstacles and ensure effective cooperation.

Here's how it is estimated by an employee of the Institute of Southeast Asian Studies, Jiao Hong: “Now there is a huge difference in the development of infrastructure across the region; a large-scale reform and major investments are needed — about 730 billion US dollars per year up to 2020”. The Manager of the China-EU Program of the Centre for Eastern Studies Marcin Kaczmarski believes that the most serious obstacles in the way to realization of the concept are the customs procedures and differences in railway systems. Interaction of railway services is difficult to establish, as the new “Silk Road” goes through three railway systems: the Chinese, the post-Soviet and European ones.

At the same time, China is willing to invest billions (and in the future — trillions) into the project. According to the newspaper Want China Times — not less than 20 trillion US dollars.

The construction, like any project of this scale, will take time. And the problem here is not just money, but also the consent of a certain country. Now China is already investing into the construction of several important roads and dams in Southeast Asia.

The “Silk Road Economic Belt” is a global Chinese idea ​​providing for the creation of transport, energy and trade corridor from the western borders of China through Central Asia and Iran to Europe. The Editor of The World Trade Shawn Donnan points out that the route is becoming more and more popular with Western technology companies such as Hewlett-Packard, BMW and Mercedes-Benz, as a more efficient way to transport high-value goods between China and Europe than the traditional sea routes. Not surprisingly, the driving forces of the economy of the EU (Germany and France) are participating in the project. Premier of the Netherlands M. Rutte, has stated: “The bilateral intra-regional trade between Asia and Europe is already the largest in the world by volume. The financial stability of the Eurozone has a direct impact on economic growth rates in Asia, and an increase of a wealthy middle class in Asia, is extremely important for Europe”.


The “New Silk Road” Map, published by the Xinhua News Agency,
indicates that land transport corridor will pass through Central Asian countries —
Kazakhstan, Uzbekistan, Kyrgyzstan, Turkmenistan, the territory of Iran, Turkey,
through the European countries to Spain or the UK, and through Ukraine to the capital of the Russian Federation


According to estimates by Igor Sheviryov, restoration of the “Great Silk Road” meets the global trends of globalization, contributes to the unity of the countries of the Eurasian region, development of the economic potential. The prospectively of the new “Silk Road” is determined by global trends. The first trend — in the post-crisis world, developing countries gradually become stronger as the main “drivers” of the world economy. In this case we have in mind, of course, BRICS countries. The second trend — the emergence of new global leaders, which in turn contributes to the creation of new centers of economic development. Consequently, there is a shift of global influence from the crisis West to the dynamic East. The world's center of economic life gradually moves to the vast expanses between Eurasia and the Asia-Pacific region.

A journalist of Ukrinform Olga Tanasiychuk specifies that, in accordance with the Chinese leadership's ambitious idea, the new “Silk Road” has to go from east to west through the territory of 18 European and Asian countries, the population of which is about 3 billion people. This route is considered the longest and potentially most important economic corridor on the Earth, designed to help the recovery of the world economy. But the project does not create any new mechanism of multilateral cooperation, its main function is to form new ways of geo-economic interaction.

V. Chentsay is sure that the “Silk Road Economic Belt” is a comprehensive project spreading to the East, West, North and South, and that the “Ancient Silk Road” is deep in the hearts of peoples as a project from which everybody benefits.

The leader of the Program “Russia in the Asia-Pacific Region” of the Moscow Carnegie Center Alexandr Gabuyev states that later the concept was supplemented by the “Marine Silk Road” — the improvement of infrastructure of maritime transportations from China to Europe. A Chinese cruise liner went out from the Chinese port of Beihai to symbolically mark the territory of the new Chinese mega-project. Chinese experts have often said that China aims at creating a corridor which would at least slightly weaken the country's dependence on sea routes controlled by the United States.

Now most of the trade between Europe and China is by sea, as sea transport is almost half cheaper than the ground one. But the development of roads connecting the East and West of Eurasia, could change the situation. The “Marine Silk Road” provides for the construction and modernization of ports and canals. It will be crossed by canals such as the economic corridor China-Pakistan and Bangladesh-China-India-Myanmar.

Map of the alleged the “New Silk Road”. Red lines — overland routes, blue — the marine “Silk Road”

The economist from Singapore, Jeng Chzhonyan points out that China's hegemony in the project in economic terms is neither dangerous nor strange. China needs to look for new commercial areas and the launch of the “Maritime Silk Road” will significantly revive those efforts.

Unlike Chzhonyanu, a correspondent of The Times of India in Beijing Saibal Dasgupta not without reason draws attention to the existing fears that China could eclipse the influence of ASEAN, if the Member States are connected by roads and sea routes, the construction of which was financed by Chinese companies.


The volume of trade between Africa and China.
This dynamic underlies the “The 21st Century Maritime Silk Road” and plans to build seven large-scale African ports.


M. Kaczmarski points out that the “New Silk Road” will be an alternative to the USA's dominance and Russian integration projects in these regions. The concept will help the growth of China's influence in the transit countries on its way to Western Europe, that is in the Middle East (Arab countries, Israel and Turkey), in the Horn of Africa and in Central Europe (the Balkans and the countries of the Vyshegrad Group). The concept of the “New Silk Road” provides China with a flexible form of dialogue with a large number of participants. China can “sell” the concept in individual countries and regions. This is a fairly profitable multilateral cooperation organized by China, not forming pro-Chinese and anti-Western blocs, which could frighten off potential participants.

Like any Chinese concept, the project was not clearly formulated in order to leave for Beijing the freedom of its further interpretation. This will create an international competition for the chance to benefit from participation in individual elements of the project. The Russian President V. Putin and the leader of China Xi Jinping have signed a joint statement on cooperation in terms of construction of the Eurasian Economic Union (EAEC) and the Economic Belt of the “New Silk Road”.

It is to Kazakhstan that the main lines of the planned land “Silk Road” come

A. Gabuev points out that V. Putin's favourite project (EAEC), which in the West is called the monument to protectionism and geopolitical ambitions of Moscow, may be a “fairly useful thing” when combined with Chinese money and infrastructure. Of key importance here, of course, there will be a dialogue with Astana. It is to Kazakhstan that the main lines of the planned land “Silk Road” come. Also, the President of Belarus Aleksandr Lukashenko has put forward the idea that China should use Belarus as a nodal aspect of this project.

Ukraine will also be involved in the single system of infrastructure and trade routes in Eurasia, combining the eastern and western parts of the continent, serving the prototype of the “Great Silk Road”. This statement was made during the business forum in Kyiv, by the Chinese Ambassador to Ukraine Z. Siyun. He said that the Ukrainian government had received the document, which defined the development and implementation of the project “101 belts and one way”. It outlines general advice, approaches to the construction and development of trade routes and infrastructure. The Ambassador stressed that the geopolitical situation of Ukraine, in conjunction with its scientific and industrial potential, makes the country a strategic partner for China.

Ukraine actively supports the idea of ​​recreating the “Great Silk Road”, said the Ambassador of Ukraine to China O. Dyomin, speaking at the International Seminar “The Economic Belt of the Silk Road”, which was held in Beijing. According to him, “the Eurasian steppes — from Mongolia to the Carpathian Mountains are ideal for one of the most saturated routes of the “Great Silk Road”.


The Asian Infrastructure Investment Bank: The Project for the Sake of Yuan

It is known that the Asian Infrastructure Investment Bank has already been joined by Brazil, Georgia, Finland, Denmark and the Netherlands. Applications to join the Bank on the rights of the founders by the deadline (March 31) had filed, according to the latest information, 52 countries, including Russia. The USA and Japan have refrained from the entry into the new financial institution.

The Agreement on the establishment of the AIIB was signed in October 2014. October 24, 2014 in Beijing, representatives of 21 Asian states (led by China) signed a Memorandum of Mutual Understanding on the establishment of a multilateral intergovernmental financial institution. Its founders are China and 20 Asian countries (Bangladesh, Brunei, Cambodia, India, Kazakhstan, Kuwait, Laos, Malaysia, Mongolia, Myanmar, Nepal, Oman, Pakistan, Philippines, Qatar, Singapore, Sri Lanka, Thailand, Uzbekistan and Vietnam). More and more countries, including Western ones, express their desire to cooperate with the AIIB. 7 Arab countries have also joined the AIIB: Egypt, as a founding member; UAE, Saudi Arabia, Qatar, Jordan, Oman, Kuwait — as an associate member; 17 EU member states, namely France, Germany, Portugal, Italy, Poland and the United Kingdom. According to Chinese experts, the share of the Asian members of the AІІB will account for 75 % of the voting shares. The number of countries that have joined the project shows the great interest to the Asian market, as well as an interest to a strong currency.

Prospecrive Founding Memders of AIIB

The authorized capital of the Bank makes 100 billion US dollars. It is pointed out that the bank's authorized capital is not too big for the infrastructure projects, but here there is a very strong line-up of participants, and this is important. In particular, China has sufficient financial resources to contribute to the bank in the financing of any necessary projects.

Experts perceive the AIIB as a potential competitor of the IMF and the World Bank, situated in the USA. The US Finance Minister J. Lew has already warned that the World Bank and the IMF can be endangered by the loss of confidence. Meanwhile, the IMF Managing Director C. Lagarde, while visiting China, said that the World Bank and the IMF are ready to work with the AIIB. At the same time, the official Beijing has repeatedly said that the AIIB will be a supplement to the existing international financial institutions.

As you know, the World Bank and the IMF have always been headed by US citizens. At this, international financial institutions, which are dominated by Americans and Japanese, were not able to allocate the necessary amount of funds for infrastructure development in the Asian region, which is why China has decided to take matters into its own hands. Besides, for a long time in the world there was a tendency of concentration of the international balance of power in the West. The Chinese government is trying to resist this state of affairs, so in July 2013 it announced about the creation of the Bank of the BRICS, and in October 2014 — of the project of AIIB.


The Asian Infrastructure Investment Bank

There are different points of view on the prospects of this project.

According to the Associate Professor L. Ukrainets' conclusion, which she has provided to the Information Analysis Center of the Faculty of International Relations Franko National University of Lviv, “The Asian Infrastructure Investment Bank is a logical proposal in this context. But the composition of the countries wishing to join, somehow alarms. On the one side — Luxembourg, United Kingdom, Switzerland, on the other — Tajikistan, Mongolia, Cambodia, on the third one — countries of the Persian Gulf. It is quite a motley company. Of course, the variety and diversity — that's good. There are many examples of organizations whose members are too different in their level of development, their objectives and strategies, turn not into effective mechanisms for addressing financial and economic problems, but into a “talking shop”, where their function is reduced to spontaneous meetings and negotiations, not binding to anything. It seems that China itself is already afraid that the AIIB could suffer such a fate”.

As explained to the Information Analysis Center of the Faculty of International Relations of Franko NUL by Associate Professor N.V. Gorin, “Creation of the AІІB — is not just a formation of the financial mechanism for the” Silk Road” project, but it is also the implementation of China's plans to extend the role of the Yuan to the world's main reserve currency. Involvement of the founders of the bank, from not only Asia and the Middle East, but also from the leading EU countries, including the UK, Germany, France, Switzerland shows that the Bank has the potential to become an effective global financial institution, and the project of the “Silk Road” should be perceived quite seriously and realistically.

Today there is no reason to believe that it will be an alternative to the IMF. Most likely it will be a promising alternative to the World Bank and the IBRD. China has been declaring about its plans to make the Yuan a global reserve currency. With the help of this Bank it might try to realize this idea. Taking into consideration the number and diversity of the participating countries, as well as the fact that most European countries do participate, the Yuan could actually oust the dollar. Especially it may pose a threat to the dollar from the point of view that most of the contracts will be concluded in Yuans. However, the Bank was not founded to create a competition between currencies, nor the “Silk Road” was created to improve access to markets. The Bank will have an influence on monetary and financial systems of developing countries (Malaysia, Thailand, Philippines). For them, it will have a positive influence”.

Activity of the AІІB as a new international financial organization will also be directed at promoting the development of the general infrastructure and economic integration of Asian countries, which is needed to support trade and economic cooperation and to reduce the gap in socio-economic development between the countries of the region. The first project of the Asian Infrastructure Investment Bank will be financing the Chinese “Great Silk Road” project. At the first rate the new Bank will finance energy, transportation, logistics, urban and rural infrastructure, thereby the AІІB will enable Asian countries to develop infrastructure and maintain a sufficiently dynamic, stable and continuous development of the economy, and the developed countries will be able to expand their investment needs and to stimulate renewal of the economy.

The concept of the Bank can reduce the ratio of the IMF's participation in the region, and this will allow China to become the world leader, to contribute to the creation of the image of China as a responsible global state, supporting the idea of ​​internationalization of the Yuan and to increase China's contribution into the global financial system. We also know that China will launch its international payment system CIPS in September or October 2015. According to agency Reuters, the launch of the system will make the Chinese currency more attractive for worldwide use. The development of trade, of course, requires stability in monetary policy. And in this China, together with the countries of Eurasia, was faced by a common challenge: the need for rapid dedollarization of the economy, abandonment of the US currency, transition to the use of the national units in mutual trade. Professor of the School of International Affairs of Pennsylvania State University, a researcher at the School of International Studies at Peking University Flynt Leverett, a researcher at Georgetown University and a Senior Research Scientist at the Institute for Financial Studies of Chongan at Renmin University of China Hillary Mann Leverett, as well as a Researcher at the Washington Institute for Near East Policy Wu Bingbing pointed out that the broader the use of local currencies in cross-border exchange is facilitated by the growing number of agreements between the People's Bank of China and other national central banks. Sh. Tiezzi stresses that China considers the “Silk Road” as a “great convergence of capital and a monetary integration”. Yuan is more and more readily used in Mongolia, Kazakhstan, Uzbekistan, Vietnam and Thailand.

The Asian Infrastructure Investment Bank will provide China with a platform for the export of capital, labor and experience in the sphere of construction infrastructure to developing economies. The peculiarity of this Bank is that it will fund large-scale projects in Asia, which will be able to maintain economic growth of member countries.

In Washington, the mass pilgrimage of its partners to the East was perceived almost as “a knife in the back”

In Washington, the mass pilgrimage of its partners to the East was perceived almost as “a knife in the back”. It should be noted that America scrutinized the decision of its faithful allies (the UK included) to join the Asian Infrastructure Investment Bank. According to The Financial Times, Washington did not like that London's decision was made “almost without consultations with the United States”. Let us try to explain the discontent (and possibly concern) of the US authorities: the AІІB can make a real competition to the IMF, which has long lost its economic functions and turned into a tool for USA's political pressure. Besides, the AIIB will be another venue with the help of which Moscow will participate in large investment projects.

As for Japan, it first supported the United States in its decision not to participate in the project. Japan, firstly, is China's main competitor in the region, and secondly, along with the United States it has made a contribution into the Asian Development Bank (ADB). However, the emergence of a new large financial institution in Asia should not be ignored, that is why the Japanese Ambassador in Beijing has stated that Japan may join the founders of the Bank. According to the Director of the ADB T. Nakao, the banks are already cooperating. And this is obviously, because the countries of Asia and the Pacific region are developing at a record pace and promise billions in profits to investors.

Director of the European-Chinese Academy, founder of the Euro-China Forum David Gosset is sure that the “Economic Belt of the Silk Road” and the “Marine Silk Road” supported by solid investments of the AIIB, symbolize the 21st century China, while the Eurasian players in such a way are getting a historic opportunity. Some experts may say that China's increased attention to Eurasia from the geopolitical point of view can be considered a response to the announced by the Obama administration “turn to Asia.” However, the project cannot be considered a tactical scheme aimed at confrontation with anyone. The PRC, which will soon become the first in the world economy, is fully aware that, along with the power comes together with responsibility. In this sense, the “Silk Road” project can be perceived as a Chinese analogue of “Marshall Plan” — it supports the neighbors of the Middle State, helps their growth, and gives them a place in the system developed by Beijing.

During the negotiations at the APEC Summit Xi Jinping said: “I invite everybody to the Chinese train of development”. That is, China is expected to lead the economic and infrastructural development of Asia. The countries dreaming of profit in the process should “raise their hands”. Leading European countries have decided to join the Asian Infrastructure Investment Bank, despite Washington's urgent requests not to do it. Cooperation in such organizations improves the trade and economic relations between China and the West.

In fact, this significantly affects the balance of forces in the ongoing confrontation between the USA and China over who will be setting economic and trade rules in Asia. According to the American edition The Huffington Post, “... now, perhaps, we are witnessing a landmark event of the end “of America's domination" and the beginning of a new “Asia's age”. A global economic alternative has been born. Now we just have to wait and see “how it will grow and what it will become”.



Expert assessments:

Gorin N.V., Associate Professor of the department of International Economic Relations of Franko NUL

Ukrainets L.A., Associate Professor of International Economic Relations of Franko NUL.



Rogovik O., a coordinator of the Information Analyses Center;

A. Yablonskaya, an analyst of the Information Analyses Center.


See the original publication — Information Analyses Center: http://iac.org.ua/novi-kitayski-drakoni-chi-narodzhuyetsya-globalna-ekonomichna-alternativa/