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China and the U.S. to build "One Belt, One Road" together
Add time:2023-12-06    Click:94

The Biden Administration of the United States wishes to elevate the significance of "Bidenomics" to the same level as that of the famous Roosevelt New Deal and Reaganomics in the history of the United States. If the U.S. participates in the construction of the "Belt and Road" and strengthens cooperation with China, it will bring benefits to the U.S. economy. For China, the United States and China have extensive common interests in many fields, including economy, energy, education, science and technology, and environmental protection, etc. Enhancing cooperation between China and the United States under the framework of "One Belt, One Road" can make a bigger cake by complementing each other's strengths and weaknesses, and also bring new opportunities for China's economic development and scientific and technological advancement.

Infrastructure development is a key pillar of Bidenomics. The White House has declared that the plan will invest in the United States in a way "not seen since we built the interstate highways and won the space race". The plan consists of four main types of infrastructure investments: first, transportation infrastructure including highways, bridges, railroads, ports, airports, and public transit; second, utility infrastructure including water, power, and grid; and third, community care infrastructure for seniors and children. The fourth is investment in manufacturing, supply chains and innovation.

Although Biden's infrastructure program is ambitious, but in the implementation of the Republican opponents and fellow Democrats are frequently hampered. On the one hand, because the cost of infrastructure planning more than 1 trillion dollars, huge expenditures are likely to lead to a surge in the deficit, thus raising the United States inflation expectations and the size of the federal debt. On the other hand, some people believe that the planning is too broad, too idealized, the actual operation is more difficult to achieve, the United States of America's current scientific and technological, industrial base, including demographics and other resources, it is difficult to support the completion of the infrastructure plan alone. From the current progress, Biden's infrastructure plan and the reality of the gap between there is still relatively large.

However, the short board of the United States is the long board of China. China is currently the only country in the world that owns all the industrial categories in the United Nations Industrial Classification, and has a strong competitive advantage because it has a full industrial chain of infrastructure, plus mature construction technology, low prices and good quality, and better cost control than other countries. China's infrastructure technology, engineering capacity, industry and price structure can match and complement the U.S. Moreover, China's cooperation with the "One Belt, One Road" co-construction countries often starts with infrastructure cooperation, and has accumulated rich experience in overseas infrastructure engineering, so if China and the U.S. can carry out infrastructure projects under the framework of the "One Belt, One Road", they will have a strong competitive advantage. If China and the U.S. can cooperate in infrastructure projects under the framework of "One Belt, One Road", a win-win situation will be realized.

In addition, if the Biden government hopes to increase debt issuance efforts to finance to solve the 1 trillion dollar infrastructure spending, then, as the main creditor of U.S. Treasury bonds, China's attitude towards whether to buy U.S. debt is very critical. If China is not willing to increase its holdings of U.S. debt, or even sell U.S. debt, not only the Biden government refinancing pressure will increase, and will lead to a rise in U.S. Treasury yields, as the U.S. 10-year Treasury yields are the U.S. bank lending reference benchmark rate, the higher the yields and the higher lending rates will rise, which will aggravate the U.S. business and consumer borrowing costs. If the United States and China cooperate through the "Belt and Road" initiative, with China's resources and funds, may be able to help solve the problem of financing the reconstruction of American infrastructure.

Another focus of "Bidenomics" is to revive industrial policy to attract manufacturing back to the United States. However, under the influence of globalization, the United States manufacturing industry has long been moving towards outsourcing in order to significantly increase the profits of United States multinational corporations. Currently the total overseas profits of U.S. companies has exceeded $ 4 trillion, only General Electric, Microsoft, Pfizer, Merck Sharp & Dohme, Apple, IBM and other 15 U.S. multinationals overseas profits totaled nearly $ 1 trillion, benefiting from these overseas profits are not subject to U.S. tax law, U.S. multinationals are seeking to create the highest return on profits for shareholders by using overseas profits, coupled with the majority of U.S. multinationals overseas profits has been Far beyond the profits in the U.S. mainland, the need for U.S. multinational enterprises to return to the U.S. mainland, the difficulty is not small.

If the Biden administration wants to successfully attract a large number of manufacturing industries to return, it can consider the construction of the "Belt and Road" framework, to attract enterprises from China to invest in the manufacturing industry in the United States, or to open factories in the United States, and then export the products made in the United States to the construction of the "Belt and Road" countries. The "Belt and Road" countries. Moreover, with years of rapid economic development, China's economy has entered a consumer and service-oriented stage, becoming an important source of global procurement, such as the Biden government can cooperate with China under the "Belt and Road", undoubtedly help to increase the export of U.S. manufacturing products to promote the development of U.S. manufacturing industry. In addition, in the field of manufacturing, the United States now lacks a complete upstream and downstream industry chain, and most of the parts need to be imported from abroad, coupled with the high cost of production in the United States, the relative lack of price competitiveness of many products, which can be complemented with a complete upstream and downstream industry chain, lower production costs in China.

More importantly, U.S. participation in the construction of the Belt and Road will also allow for third-party market cooperation with China, which will help to open up new markets for the U.S. manufacturing sector, thereby boosting U.S. economic and employment growth. Compared with China, the U.S. has more historical connections in many of the Belt and Road countries, and the U.S. has a deep understanding of the local area, a rich network of contacts, and rich experience in operation and management, plus co-development of the third-party market cooperation is conducive to sharing the risk of investment, as well as reducing the risk of independent investment between China and the U.S. in the Belt and Road countries. The co-development of third-party markets is conducive to sharing investment risks and reducing possible confrontation between China and the U.S. in the "Belt and Road" co-construction countries when investing independently, increasing the space for cooperation, and cultivating new economic growth points. The third-party market, in order to develop the economy, transformation and upgrading, also urgently needs relatively low prices of products, medium and high-end manufacturing capacity from China, as well as high-end technology and advanced concepts from the United States.

At the same time, if American enterprises are willing to complement each other's strengths with Chinese enterprises in the third-party market and engage in new types of cooperation, such as joint bidding, joint production and joint investment, and promote the development of the third-party countries under the premise of respecting the wishes of the third-party countries, it will be very likely to realize the mutual benefits of the three sides and win-win situations. The third-party market cooperation between China and the United States can reflect that China is not pursuing the modernization of its own, China is willing to work with other countries to achieve peaceful development, mutually beneficial cooperation, common prosperity of the world modernization, and promote the construction of a community of human destiny. (The authors are the president and honorary dean of the "Belt and Road" Research Institute of Hainan University.)