Belt and Road Facilitates Winning Trade War, Competition with the USPosted: November 29, 2018
When Chinese President launched his Belt and Road initiative, he knew that to switch to innovation- and creation-led growth China has move its labor intensive industries abroad, but there had to be infrastructures of transport and power generation there. He has the vision five years ahead of Trump’s launch of trade war.
Chinese labor intensive industries should have been busy to relocate in Belt and Road areas abroad while Xi has been striving to carry out his ambitious Belt and Road projects. However, just as pointed out in Reuters’ report “Supply chain reaction: trade war refugees race to relocate to Vietnam, Thailand” today, there are problems “ranging from red-tape to skilled labor and limited infrastructure”. Anyway, quite a few has relocated or are making preparations to relocate due to Xi’s reform that encourages innovation and creation while discourages expansion of labor-intensive industries.
The report says that there is “a frenzy of activity across Asia in recent months: executives are requesting product samples, touring industrial parks, hiring lawyers and meeting with officials”. However, those are mainly foreign executives as Chinese ones began doing so earlier due to Xi’s reform.
Xi cannot drive away foreign labor-intensive industries in China to release land, labor infrastructures and other resources to make way for foreign investment in high technology. Trump’s trade war is now helping Xi do so.
Due to the need for infrastructures in the countries those enterprises will move to, Belt and Road projects will much more profitable and in hot demand. They will attract those who are now demonizing the projects as debt traps .
When low-tech enterprises in China have moved to Belt and Road areas or switched to higher-tech sectors and when low-tech foreign investment has been replaced by high-tech one, Chinese economy will take off again. Moreover, the Belt and Road projects will make areas involved rich and become growing markets for China’s export.
It is very clear Belt and Road will facilitate China in winning trade war or economic competition with the US.
Comment by Chan Kai Yee on Beuters’ report, full text of which can be viewed at https://www.reuters.com/article/us-usa-trade-china-vietnam-insight/supply-chain-reaction-trade-war-refugees-race-to-relocate-to-vietnam-thailand-idUSKCN1NX2XZ