Effects of China`s New Silk Road on the participating economies

Stanojević, Nataša (2020) Effects of China`s New Silk Road on the participating economies. Eliva Press. ISBN 978-1-63648-030-5

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Abstract

At the end of 1978, China made a a sharp turn in the economy from the Soviet style of central planning towards a market-oriented economy. The Chinese leadership decided to pursue the so-called Open Door policy towards the world economy. This was followed by unprecedented economic growth, based on a huge inflow of FDI into industrial production, and massive exports of goods produced in these factories. The integration of the Chinese economy with the contemporary processes of economic globalization was more complete and successful than anywhere else. After two decades of rapid economic growth, changes inevitably took place in the key aspects of the Chinese economy. The Chinese economy grew to the level of middle incomes, so that previously cheap labor, which used to attract investors from all over the world and enable huge exports, was no longer so cheap at the end of the 20th century. The inflow of foreign capital became almost unnecessary given the huge foreign exchange reserves that China had generated in the previous period. A major shift in the economic strategy was made in 2001 and a set of its basic principles was called Go Global. The focus shifted from exports as a driver of economic growth, to domestic consumption, and from FDI inflow to FDI outflow due to the need to place surplus capital. These basic principles of the Go Global strategy received further confirmation after the World Financial Crisis (GFC) 2008. It became apparent that even stronger efforts were needed in order to protect the domestic economy from external shocks. Although China's economy is still heavily dependent on the global economy, it also has a strong influence on the world economy integration through its massive investment within the New Silk Road, a project later called the Belt and Road Initiative (BRI). Today, the New Silk Road is the most dynamic and unique segment of the globalization process. This gigantic global, mostly infrastructural, investment project is a reflection of the transformation of China from a participant to one of the main promoters of globalization. The main topic of book are the effects of this new Chinese broad development strategy. The terms BRI as well as New Silk Road are used in this book, but they are not limited to the effects of Chinese international activities after 2013 when it was proclaimed. The research presented in the book includes China's initiatives, investments, infrastructure and other projects abroad, without a strictly defined period. Namely, all of China's development goals had been included in the Go Global strategy for more than a decade before the proclamation of the New Silk Road.

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