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China to take leading role in Silk Road Economic Belt region

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China is going to take a leading role in
emerging and developing countries, particularly in the Silk Road
Economic Belt region, a British expert said in a recent interview with
Xinhua.

China's prominent role as one of the engines of the global economy
will remain, said Kamel Mellahi, a professor of Britain's Warwick
Business School.

ECONOMIC REFORM

The Chinese government has set a clear and unambitious target in
switching from the high economic growth model to a balanced and more
sustainable growth model, said Mellahi. The transformation is
underpinned by a strong governance structure, less corruption, less
pollution, as well as a high entrepreneurial and innovation culture.

Mellahi stressed the rebalancing of the economy would bring new challenges and opportunities.

"The new economic model enables Chinese firms to tap into the vast
and burgeoning consumer base in China, to unleash the country's
innovation capacity. It can also help to address some of the most
pressing challenges China faces, such as air pollution," said Mellahi.

However, the challenges are also enormous. Rebalancing an economy is
fraught with uncertainties. China has to address the strong headwinds to
economic growth from the risk of deflation, tepid consumer demand and
huge corporations, Mellahi added.

"The reforms are challenging and difficult to implement, and they do
take a long time to bear fruit. However, as long as the Chinese
government succeeds in creating enough new jobs, one does not see the
slowing down of the economy spilling over into major problems," he
noted.

The professor suggested that Chinese government not only relax its
grip on some key levers of the economy, but also dislodge a few hidden
roadblocks to changes or what the government calls "tigers" on the road.

AIIB STRATEGY

When talking about the Asian Infrastructure Investment Bank (AIIB),
Mellahi pointed out it is a part of a comprehensive and well-integrated
strategy to modernize Asia as a whole and help to build the much-needed
infrastructure.

The intention is a win-win strategy with lasting results. China would
no doubt benefit a great deal from enhancing physical connectivity in
Asia. At the same time, the countries and regions can make use of
China's funding capacity and strong capability in the construction of
transport infrastructure, Mellahi elaborated.

That explains the strong backing of the strategy is not only from
countries and regions in Asia, but also from a large number of countries
and regions around the world.

"In the long term, the strategy will not only transform the Asia
Pacific region but will have a profoundly positive impact on Eurasia,
the Middle East and a significant part of Africa," Mellahi noted.

The professor emphasized that the AIIB is a complement, not a rival to the existing institutions.

The bank is unlikely to shift the economic center of gravity of the
global economy away from the West and towards the East, but it will help
transform the region into a highly connected economic powerhouse, he
told Xinhua.

"The AIIB is unique and complements the existing institutions. It is
going to be the driving force behind regional connectivity. The Silk
Road Economic Belt region needs a strong institution that is fully
dedicated to connecting the region through the development of the
region's infrastructure," said Mellahi.

2016-06-24

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