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BW Businessworld

China’s Silken Moves

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China is impressive on the surface. Especially if you visit cities beyond Shanghai and Beijing. Cities that would be huge for most of the developing world are regular urban regions for China. 
 
On my recent visit to port city Dalian in North East China for the World Economic Forum (WEF) summit, I marveled at the country’s ability to create cities and architectural landmarks. 
 
Dalian built its strikingly magnificent convention centre that can accommodate 6000 visitors within just three years. It is a contorted steel and concrete structure that looks perpetually in motion and has a windswept look. 
 
But this column is not about the rising number of architectural wonders of China. It is about China’s smart strategy to turn sleepy regions and towns into economic engines by connecting them to the world. Despite the weak fundamentals of its economy, global CEOs remain optimistic about China. Mostly because of its plan to take economic development deeper into the country. Its premier Li Keqiang was candid enough to accept the weaknesses but bold enough to focus on boosting growth.
 
Taking the benefits of economic growth to underdeveloped regions is the key objective for the government. While it pushes to create more cities like Dalian, western companies see undeveloped China as a huge emerging market. 
 
I had a deep conversation with Hikmet Ersek, President and Global CEO of Western Union (WU) at Dalian. He felt that financial inclusion driven by companies like WU would play a critical role in the growth of markets like China. “Countries like China and India have immense need for financial services in rural and remote areas. When millions join financial mainstream, it will drive growth to higher levels,” said Ersek. WU is focusing on delivering financial needs to remote communities and is not terribly bothered about the talk of China’s collapse. 
 
China has opened an exciting new dynamic in central Asia. Global business leaders are busy discussing the impact of President Xi Jinping’s gambit of creating an economic corridor along the Silk route to connect China with Central Asia. 
 
This move will fix two problems in one effort.  It will create economic excitement in neglected regions of central and western China. And it will also help China to increase its influence in central Asia where the West does not have much traction. 
 
With south-east Asia cold to China’s growth in their region, President Jinping is focussing on nurturing an economic coalition where western influence will be limited. Moreover, it will provide China with new allies with whom it will take a new route to European markets. 
 
China is leveraging the Shanghai Cooperation Organisation (SCO) that includes Russia and its former constituents Kazakhstan, Uzbekistan, Tajikistan and Kyrgyzstan.  The plan is to create transport and logistics linkage along these countries to Europe. Even Turkmenistan will be part of China’s silk route. 
This route will have a strong internal impact too. After southern China’s economic zones that benefited from port access, the government will create boomtowns in central and western China by connecting them to the world through the silk route. 
 
This seems like a brilliant strategy for China. By spreading growth more evenly across the country, the government will reduce inequities and dissatisfaction across the regions. As its society becomes more restive and vocal, growth in new regions will quell much criticism. 
 
Other developing countries like India and Turkey should to take lessons on how China is boosting internal development with global linkages.
 
Western analysts who are predicting China’s collapse may have to revise their assessment in a few years as more regions act as boosters to its economic might. 
 
(Pranjal Sharma is a senior business writer. He can be contacted at [email protected]