The "Belt and Road" development initiative recorded impressive achievements in 2017, exceeding even some of the more optimistic expectations. These included the hosting of the pivotal Belt and Road Forum for International Cooperation in Beijing and progress on a number of landmark projects including the China-Laos Railway, Pakistan’s Karakoram Highway Phase II, the Karachi Expressway, the Mombasa-Nairobi Railway in Kenya as well as the China-Russia, China-Kazakhstan and China-Myanmar oil and gas pipelines. In line with the rapid development of the digital economy, the 21st Century Digital Silk Road project was launched with a number of participating countries to develop cross-border e-commerce and eliminate the digital divide.

The "Belt and Road" initiative, which is designed to boost infrastructure development and trade across a wide range of countries, is expected to have a significant impact over the longer term. In 2017, the average growth in trade with "Belt and Road" participating countries topped 10%, exceeding the growth in China's trade overall. In the first three quarters of the year, trade between China and countries participating in the "Belt and Road" program increased by 15% over the same period of last year. The value of new contracts signed by Chinese enterprises for construction projects in these countries increased 29.7% and investment was up 34.4% over a year earlier. This shows how China's "Belt and Road" initiative contributes to globalization and can help make the case for greater economic cooperation in the court of public opinion. It also has successfully demonstrated a new form of global cooperation.
 

In 2013, President Xi Jinping proposed the "Belt and Road" initiative, with an eye to domestic and global economic conditions. The program sought to  make use of China’s development experience in an effort to achieve sustainable growth through greater globalization. In the past four years, China has adhered to the principle of achieving shared growth while upholding a process of discussion and collaboration. This has been vigorously promoted by creating infrastructure connectivity, facilitating trade, boosting financial integration and expanding ties at the grass roots level. The results have vastly exceeded expectations.

China has signed more than 90 cooperation agreements with over 70 countries and international organizations under the "Belt and Road" initiative. It is also working with more than 30 development agencies while Chinese enterprises have helped in the construction of 75 economic and trade cooperation zones in 24 countries. These companies have paid taxes and fees to the host countries totaling US$2.21 billion, creating more than 209,000 jobs. In addition, the "Belt and Road" initiative has brought in global capital by means of international cooperation and the use of innovative financing methods. According to preliminary data, international financial institutions have provided more than US$400 billion for construction linked to the "Belt and Road" initiative, and this has made a substantial contribution to economic growth in the region.

The progress achieved in little more than four years can be attributed to three key factors. First, the initiative meets the aspirations of developing countries for the achievement of peaceful economic progress. It provides a platform for energizing economic growth by locating development opportunities, and that in turn has helped gain public support for the program. Second, the Chinese government has played a leading role in the initiative, concentrating its efforts on key development areas and mobilizing the efforts of government, enterprises and individuals. Third, China has advanced technical skills in infrastructure construction as well as spare capacity. The nation's corporations have a huge demand for extending their footprint in the  international sphere while the financial sector has provided important support.

In general, the "Belt and Road" initiative has entered a period of smooth and efficient policy communication and coordination where significant progress has been made in the construction of major projects. Nonetheless, it is clear that there are significant challenges and risks. First, most of the countries in the regions covered by the initiative are developing economies and many have problems with domestic governance. There are more geopolitical and cultural conflicts and the  financial foundations are often weak. As a result, many projects face significant  financial and political risks. Second, due to competition and interference from outside forces, mutual trust and cooperation among the major powers is facing new challenges. There are new demands placed on China in terms of national defense, diplomacy and cultural differences. Third, there is still insufficient global capacity, particularly financial capacity, for greater participation in this scale of  infrastructure construction. At present, China provides the bulk of the financial support. China's international balance of payments figures show that the nation's own resources are insufficient to meet the demands of such ambitious development goals.

In the future, China may need to take the following measures. First, it should prioritize the proposed projects and concentrate resources on core development areas. These should also proceed from the easier ones to the more difficult ones. China should give priority to friendly countries with complementary resources and relatively strong foundations for development. Second, it is necessary to combine soft power with the hard power of politics, economics and military capabilities. This will be aimed at eliminating strategic and security concerns and stimulating enthusiasm for participation among other countries. Third, China should vigorously promote financial innovation and give full play to the role of international financial institutions and major international banks in Hong Kong, Shanghai and other international financial centers. Along with these more innovative mechanisms and financial instruments, China should channel its own surplus funds to boost investment in the "Belt and Road" initiative and help ensure there is a greater ability to manage financial risks.

The author is from the Bank of China's Institute of International Finance.