The forecast for the Asian manufacturing industry may have been looking a bit bleak at the beginning of November, but if this year’s Asia-Pacific Economic Cooperation (APEC) forum results in successful international free trade agreements by the middle of November, the Chinese government may be able to reestablish positive trade relations with U.S. businesses.
Chinese President Xi Jinping has begun lobbying for support of the Free Trade Area of the Asia-Pacific (FTAAP) agreement, which focuses on a “Silk Road” strategy when it comes to international trading. The idea behind this strategy resembles the purpose of the Silk Road trade route, which existed between China and Europe during the 7th to 10th Centuries, and which promoted the spread of Chinese influence through amicable trade agreements.
According to a recent Reuters article, President Xi Jinping recently announced that the $40 billion would be allocated to the building of “roads, railways, ports, and airports across Central Asia and South Asia.”
In addition to building infrastructure, Xi claims that the Silk Road program will set up over 20,000 locations where neighboring countries can train “connectivity professionals” during the next five years.
Previous to the announcement of the Silk Road program, the Chinese government had unveiled a $50 billion Investment Bank, backed by Chinese currency, and the country has been offering substantial loans to less-fortunate East Asian countries in order to eradicate poverty in those nations (and likely also build up a network of loyal debtors).
If these strategies end up being successful, ForeignPolicy.com notes that the program could effectively counter the “oft-criticized U.S. rebalance to Asia” by promoting free trade among Asian nations. Perhaps most importantly, these Chinese government-backed programs expressly focus on protecting workers’ rights and addressing environmental concerns — two key parts of the Chinese manufacturing industry that have not always been handled correctly by the Chinese government, or even acknowledged, for that matter.
Although the lasting implications of the Silk Road strategy may leave economists clueless for the time being, it’s very possible that these changes could have positive results on the global economy.
No, the Chinese government may not loosen its grip on the country’s economy as much as the U.S. would prefer, but countless numbers of U.S. manufacturing companies already outsource jobs to Asian countries like China largely because Asian-produced items can be sold in the U.S. at the lowest possible price. But by working even more closely with the Chinese government, manufacturers could be able to ensure — and double-check, and triple-check — that their items are being produced under humane working conditions. By supporting the Chinese economy, Americans could very well be allowing more money to flow through other poor Asian countries through Chinese-backed loans.
The Chinese economy may not be at its peak anymore, and the Silk Road program may not end with the progressive, government-free economy that many Western nations (including the U.S.) would like. But perhaps it’s still too early to claim that it will be ineffective, when there’s still the potential that it could make positive changes in the global economy.