Over the past five years and more, the Belt and Road Initiative (BRI) has greatly enhanced global trade liberalization and investment facilitation. At a time when the global free trade system is plagued by severe challenges, the BRI is given the mission of opposing trade protectionism and building a more open, inclusive, balanced and win-win mechanism in the economic globalization drive.

Since its inception, the BRI has always focused more on multilateral cooperation. With 65 participating countries as the carrier and Eurasian cooperation as the core, the BRI has gradually expanded to a “65 plus” across the globe. In other words, it is not a tool of “geopolitical alliance”, but an open economic platform aiming to maintain the multilateral trading system through discussion and co-construction.

From a global perspective, it is urgent to firmly defend the rule-based multilateral trading system and properly handle bilateral economic and trade relations within the system. For example, the China-US trade frictions will have a more multilateral, indirect impact rather than bilateral, direct impact.

Therefore, we need to maintain close multilateral cooperation in advancing WTO reform, and speed up free trade agreement negotiations such as the Regional Comprehensive Economic Partnership (RCEP), the China-Japan-South Korea FTZ and the China-EU FTZs through the BRI. We also need to dock the BRI with the Comprehensive Progressive Trans-Pacific Partnership (CPTPP) in terms of funds, projects and markets.

The new phase of economic globalization and China’s economic transformation and upgrading together seeks BRI construction to focus on building a multi-level free trade zone (FTZ) network.

The BRI offers a mass of opportunities to construct a FTZ network which, in turn, could drive the initiative to embrace a high-quality development. In the next few years, the climate for globalization is likely to become more complex and unfavorable. An institutional guarantee will play as a stabilizer for the BRI, and in this sense, a high-level and diversified network of FTZs will serve as one such guarantee.

As the BRI is entering a new phase, the coordination of production capacity cooperation and service trade cooperation has become a major task. From 2010 to 2017, global trade in services grew at an annual rate of 4.4 percent, twice that of trade in goods; and its share in the total volume of global trade rose from 20 percent to about 24 percent. The rapid growth of trade in services has also make it the focus of negotiations on bilateral and multilateral trade and investment agreements, where, however, tensions and cleavages always lie.

The progress made in the BRI construction shows that both infrastructure and international production capacity cooperation projects have generated huge demand not only for industrial and consumer goods, but also for service sectors such as technology, finance and logistics. In 2017, the service trade between China and BRI countries accounted for only 8.2 percent of the total trade volume, calling for further expansion of services cooperation.

The integration of production capacity cooperation and services trade requires breaking the administrative monopoly in the domestic services sector, promoting the comprehensive opening of the services market, and strengthening the protection of related intellectual property.

Besides, to advance the BRI as well as the FTZ network, it is important to align with high-standard international economic and trade rules and create an international business environment based on the principle of competitive neutrality. At the same time, it is equally important to increase the proportion of the private economy in BRI foreign investment cooperation from the current 40 percent to more than 60 percent to make private enterprises an important part in this area.

A down-to-earth attitude is needed in the process of the construction of the Belt and Road FTZ network with concrete steps. For example, the FTZs could be first established in countries with mature conditions, such as the member countries of Shanghai Cooperation Organization and 10 ASEAN countries that has maintained close cooperation within the“10+1” framework. When conditions permit, free trade policies in the fields of tourism, health care, e-commerce and so on are to be implemented.

Establishing various forms of economic cooperation circles for the BRI.

As the BRI focuses on extensive cooperation in such fields as infrastructure, manufacturing, services, energy and resources, it is feasible to establish various forms of economic cooperation and implement free trade policies in the fields mentioned above. For example, we can build regional trade centers such as a “pan-South China Sea tourism cooperation circle” for cooperation between Hainan province and relevant island economies in tourism, health, culture and education.

What’s more, it is important to establish border economic cooperation zones at major dry and sea ports, and build a number of cross-border economic cooperation zones at key nodes of the FTZ network. Qualified cross-border economic cooperation zones could also be upgraded to bilateral FTZs.

Chi Fulin is president of China Institute for Reform and Development.

The author contributed this article to China Watch exclusively. The views expressed do not necessarily reflect those of China Watch.

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