The panel session “International Cooperation and Development in the New Normal: The One Belt One Road Initiative” held its third session on the afternoon of November 7 at the Sunlight Hall of the Yingjie Exchange center at Peking University.

The first speaker was Professor Venkatachalam Anbumozhi from Economic Research Institute for ASEAN and East Asia. His speech was about reinforcing regional cooperation for sustainability. He argued that the current economic policies on their own are not enough to transform societies to a low-carbon world and the world is desperate for a new form/model. He used data of different countries to illustrate that a low-carbon world is preferred with the concern of sustainability. In addition to the market forces, combination of policies, such as the One Belt One Road Initiative, is required to reinforce regional cooperation. All these mutual supports help form expectations that the markets for low carbon technologies will emerge in the near future, which is necessary to drive and motivate innovation. This also implies that different policy packages, employed at different stages of the innovation process and development of the market will be required and hence international cooperation. Finally, he suggests that China may be able to lead the global government initiative to power the sustainability dream through regional cooperation. 

Mr. Atsushi Masuda, the chief analyst from Japan credit rating agency Ltd., gave a speech on international economic cooperation and development. He first mentioned that the economic cooperation to the regional integration needs a grand version of the future economic configuration of the region, such as the One Belt One Road Initiative. While the international financial organizations such as the forthcoming AIIB will play a leading role, all sort of the financial resource needs to be mobilized, including the bilateral official assistance and the private resource. Next, he argued that the institutional arrangements are equally important in comparison to the physical construction of hardware infrastructure. Finally, he suggested that the political support would be a critical factor to overcome the difference and the obstacles among the participating countries. 

 

Professor Brian Wright from UC Berkeley gave a speech on innovational economics. He discussed some economics threads for the New Silk Road, the long road that connects markets previously separated by high transport costs. He pointed out that a new improved road is a spatial innovation and creates new possibilities, not all of which can be foreseen. To simplify analysis, he first studied the arbitrage in subsistence autarky and the potential for intertemporal security arbitrage storage to increase consumption security. This approach is different from other recent research in the literature regarding the effect of long roads and rail projects. Next he introduced and summarized different studies in the literature to clarify the role of railways and highways on industrialization, transportation costs on storage and trade, etc. Finally, he concluded that roads could enable the overall welfare gain from specialization. A road complements some market activities, such as specialized market production, but substitutes for others, for instance, subsistence production. 

Mr. Yu Jiantuo from China Development Research Foundation gave the presentation on the economic effects of One Belt One Road Initiative. He first briefly introduced the One Belt One Road Initiative. The One Belt One Road Initiative was proposed at the perfect timing and has drawn a lot of attentions in the world. Mr. Yu first emphasized that the One Belt One Road Initiative is not a Chinese version of the Marshall Plan. Next, he compared the One Belt One Road Initiative with the New Silk Road in great details. The One Belt One Road Initiative has its own specialty and advantages. For instance, it is a trial of entry and integration of the market rather than exit relative to the New Silk Road. Also it aims to connect Asia, Europe and Africa rather than Central Asia and South Europe as in the New Silk Road. The One Belt One Road is promising and calls for collaboration under the assumption of the equality. Finally, Mr. Yu concluded by pointing out the possible challenges and difficulties for the implementation of the One Belt One Road Initiative in the future, such as the culture conflicts, the technology issues, the coordination failures between different countries, etc. 

 

After the tea break, Professor Biswa Bhattacharya, former advisor/director from Asian Development Bank and visiting scholar at McGill University, gave a presentation on the role of regional and international institutions on enhancing Asian connectivity. He first emphasized the need for Asian connectivity stems from the need to make economically sustainable and resilient against external shocks. He first examined the prospects and challenges facing Asian connectivity and discussed characteristics of existing/new institutions for infrastructure connectivity. Next, Professor Bhattacharya predicted and estimated the infrastructure financing gap of Asia from 2015 to 2020 and discussed the role of regional/international institutions for enhancing Asian connectivity. Lastly, Professor Bhattacharya concluded by proposing a new institutional framework together with the organizational structures of a new “Asian Infrastructure Coordination Forum” for building a seamless Asian connectivity through regional and international cooperation. 

Professor Tor Eriksson argued that there exists intergenerational health inequality in China. Professor Eriksson first argued that there exist well-documented internationally large income differences between individuals in China and recent research discussed on the inequality in opportunities to access education, inequality of health, etc. An important policy implication of the aforementioned phenomenon is that the increasing inequality of income and opportunity in China can be ameliorated through the improvement of the current generation`s health status and living standards.
Professor Lee Shu Kam from the Hong Kong Shue Yan University gave the speech on the evaluation of the One Belt One Road Initiative through the lens of nonlinear adjustment analysis in real exchange rates. He argued that if there is evidence of cointegration among nominal exchange rate, prices of China and other member countries, trade arbitrages would effect economic convergence. His results support the existence of a long-run equilibrium relationship. Based on these findings, Professor Lee suggested that policy makers could prioritize and select specific member countries for joining the economic union with China.

The last speaker was Professor Liu Minquan from Peking University. His speech shared some thoughts on the development assistance as social movement. He first introduced the current situation of the International Development Assistance (IDA) and discussed its performance. Currently, billions of dollars is spent by IDA agencies themselves and some inefficiency is lost, for instance, from the top-down processes in both the selection and execution of the projects and programs. In order to improve the improve the performance of IDA, we need to strengthen ownership and accountability-seeking and decentralize the process (i.e. switching to the bottom-up process). 

At the end of the session, presenters and audiences engaged in further discussions on several related topics. Many interesting questions were asked, along with the provision of thoughtful answers and insightful comments after each session.