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Rejuvenating Silk Road

Trade in West China

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World Trade Organizationand Great Opening of the West

“GOW must first of all mean to strive hard to greatly open up the west to the outside world. Only if the west is allowed to march towards the world, will it be able to establish an adequate development mentality, to absorb the inflow of international factors of production, and to raise the overall quality through the global exchange of information.”

-- Long Yongtu (龍永圖), China's chief WTO negotiator

WTO free trade regime vs GOW preferential treatment

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Attempts to internationalize RMB reduce reliance on USD in international transactions and clearance

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Role of trade in most West China PLJs (Central China as well) is limited

Xinjiang is most dependent on trade in West China

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Slight drop in the share of export from West China during GOW

(Source: Deutsche Bank Research, 2013)

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Limited share of West Chinatrade in national market

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China's “trade surplus”

PRC International trade balance (2011): +USD183b

PRC trade balance with US: +USD273b

Net balance without US: -USD90b

China’s share of light manufacturing imports in developed countries declining

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Absolute amount of FDI on the rise but still lagging behind coastal region

(Source: Deutsche Bank Research, 2013)

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Main proportion of FDI still went to coastal region

(Source: Deutsche Bank Research, 2013)

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Once Ambitious FDI Plan of Chongqingunder Bo Xilai

RMB5b infrastructure upgrades to lure firms

Yuzhong District (渝中區) Huge boulevards

Enormous gardens (beautification project)

A batch of six-star hotels

Goals (according to Chongqing Business News)

Become the prime choice of Fortune 500 companies looking to establish their Chinese headquarters

Attract 20-30 of the world’s biggest companies in 3 years

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Yunnan: China’sStrategic Outpost in South Asia

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Yunnanand International Trade

Strategic positioning of leadership(Li Jiheng (李紀恆), Governor of Yunnan)

“Yunnan Province aims to grow into a trade hub in Southeast and South Asia and a major manufacturing base for China‘s export-oriented industries”

Two dimensions Cross-border trade

Sub-regional economic cooperation

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Yunnan in China’s Cross-Border Trade 3 neighbouring countries as principal trading partners Myanmar (1st trading partner): Over USD2b (2011, +18%)

Vietnam: USD1b

Laos: USD270m

Mainly through 3 border open cities / ports of entry (口岸) Ruili 瑞麗 and Wanding 畹町 (with Myanmar)

Hekou 河口 (with Vietnam)

Sub-regional economic cooperation

Bangladesh-China-India-Myanmar (BCIM) construct

To be discussed again in China and Southwestern Neighbours

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Guangxi and Regional Economic Cooperation

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China-ASEAN Free Trade Area (CAFTA)

Launched 2010 China and all 10 ASEAN member states 3rd biggest FTA in the world

1.8b population (30% of world’s total) GDP: USD2t Trade: Over USD1.2t Bilateral trade volume: USD105.9b (2010) 5 ASEAN countries are China’s top 20 trading partners

Dispute settlement mechanism Lifting most commodity tariffs

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Guangxi and China-ASEAN Regional Trade

Guangxi as both coastal and border PLJ Compare: Liaoning

Multi-dimensional opening in Guangxi Beihai (北海) as one of the 14 coastal open cities (1984) Other open cities: Nanning (南寧), Pingxiang (憑祥) and Dongxing (東興) Beihai Export Processing Zone (北海出口加工區) Qinzhou Bonded Port Zone (欽州保稅港區)

China and ASEAN Free Trade Area, 2010 China-ASEAN Expo (CAEXPO) Nanning-ASEAN Economic and Technology Development Zone, 2005

(promoted to state-level, 2013) Nanning (China-ASEAN) Commodity Exchange, 2008 Nanning (China-ASEAN) International Business District, 2011

Beibu Bay Economic Area (北部灣經濟區)

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Beibu BayEconomic Area

VietnamBeibu Bay

(Gulf of Tonkin)

Pingxiang(憑祥)

Dongxing(東興)

YunnanGuizhou

Guangdong

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China’s“Open Zones”

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Xinjiangat the

Crossroads of Ancient Silk Road

Historically, Xinjiang’s prosperity depended much on trade with its western neighbours

Modern days: Russia, central Asian countries Gradual revival of trade since economic reform

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Xinjiang in China-Central Asia Regional Trade

Relatively more dependent on trade (nearly 20% of GDP)

1st in terms of trade volume among west PLJs

More than 60% of national trade with Central Asia

“Northern Hong Kong” -- entrepot/intermediary trade Geographical proximity

Eurasian Land Bridge and highway/railway cooperation

Potential for complementing industrial structure and consumption

Similarities in ethnicity, religion, culture and custom

Energy cooperation -- China’s main energy land import channel

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Xinjiang’s Lion Share of China-Central Asia Trade

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Xinjiang’sPorts of Entry

(the only rail port)

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New special economiczones in the Xinjiang border area:Dzungarian Gate 阿拉山口Korgas 霍爾果斯Kashgar 喀什

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Urumqi Expo (September 2010)

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Towards Economic

Integration of Central Asia

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Shanghai Cooperation Organization Free Trade Area(SCOFTA)

Shanghai Six plus 4 SCO observers (Mongolia, Pakistan, India, Iran)

Population: 2.8b (EU: 380m; US: 400m)

More than half land size of Eurasia

1/3 of EU’s GDP (almost same level after PPP)

2015: FTA negotiations commence

2020: Target FTA launch

Obstacles (the “Stan” countries) Communist legacy in economy: Trade and non-trade barriers

Weak industrial base and tertiary sector in Central Asia countries

Lack of incentive to develop economy

Heavy reliance on import from CIS in particular Russia

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New York State Education Department, Global History & Geography Online Resources Guide

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New measures promulgated by the 3rd Plenary Sessionof the CPC 18th Central Committee(15 November 2013)

Point 17: Increase fiscal transfer to revolutionary old areas, ethnic minority areas, border areas and poverty areas

Point 24: Relax restrictions on FDI, gradually open finance, education, culture, healthcare, etcfor investment

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New Measures Promulgated by the 3rd Plenary Session of the CPC 18th Central Committee (15 November 2013)

Point 26: Expand opening of inland and border areas Promote coordinated development of trade, investment and

technological advancement in inland areas

Bring forth advancement in mode of export processing to facilitate promotion of industrial sectors in inland areas

Support inland cities to open new international passenger & freight lines

Consolidate inter-customs clearance in inland/border and coastal areas

Allow special arrangements and policies in respect of people’s exchange, processing and logistics, tourism, etc in key border ports of entry, border cities and economic cooperation areas

Set up developmental financial institutions

Speed up connections of infrastructure with neighbouring countries

Foster development (jianshe 建設) of the Silk Road Economic Belt(絲綢之路經濟帶) and the Maritime Silk Route (海上絲綢之路)