The experience of the Communist Party of China in developing the country’s economy and governance has a lot to offer to the world, which has been ravaged by a slowly recovering economy and an increasing governance crisis, said politicians and scholars at a CPC dialogue on Friday.

Professor Zheng Yongnian of the National University of Singapore said that political parties in the world face both economic and governance crises, citing the chaos in the Middle East, migration in Europe and the fallout from Brexit. But the CPC has managed to deliver effective governance and has translated good governance ideas into reality, offering a good example for other countries, he said.

Zheng made the remarks at the ongoing “CPC in Dialogue with the World 2016,” a dialogue the CPC has held annually since 2014. This year’s dialogue, held in the southwestern Chinese metropolis of Chongqing, is themed "Innovation in Global Economic Governance: Initiatives and Actions of Political Parties," resonating with the recently concluded G20 summit, where reforming the world’s economic governance system was highlighted.

Infrastructure investment is the key

Justin Lin Yifu, one of the most eminent economists in China, argued that the most severe challenge the world faces today is recovering from the 2008 global financial crisis.

It usually takes a country three quarters of a year, or at most seven quarters, to recover to its pre-crisis economic growth level, but the world’s developed economies are yet to get back on a normal track after seven years, he said, citing for example the less than 3% GDP growth rate and high level of unemployment in developed countries. As demands from developed countries contracted, global trade contracted too and the world has been left with problems such as surging protectionism and isolationism.

Developed countries thus need to carry out structural reform, the former World Bank chief economist said. Though the need for structural reform has been recognized since 2008, it failed to be implemented as it would have meant short-term reduction in demands, investment, economic growth as well as job losses.

Currency devaluation was usually a way to increase exports and hence create more room for structural reform, but this failed to help developed countries as competitive currency devaluation would push these countries into a deadlock. An alternative to that is investment in infrastructure, the economist pointed out. “Infrastructure investment would in the short-term create more jobs, increase demands and hence create more room for structural reform. In the long-term it would facilitate economic growth if it is used in solving a country’s key economic problems.”

There are opportunities for infrastructure investment in developed countries as infrastructure there is often worn out, but more opportunities lie in developing countries, Lin said, adding that the need for infrastructure investment in Asia is as high as US$800 billion each year and US$500 billion in Africa.

China’s experience in infrastructure investment

Lin went on to argue that one of the experiences of China’s miraculous economic growth over the past four decades has been investment in infrastructure, as epitomized by the well-known aphorism “in order (for a place) to get rich, build a road first.” He cited the dialogue’s host city Chongqing as an example, which, despite being an inland city, manages to export its goods across the world due to infrastructure development.

In the same vein, China proposed the Belt and Road initiative, in which infrastructure connectivity is a key, Lin said. The Asian Infrastructure Investment Bank and the New Development Bank were established in order to finance global infrastructure construction, he added.

Echoing Lin’s words is Liu Qitao, chairman and party secretary of the China Communications Construction Co. Ltd. He took the example of his company, which is one of China's largest infrastructure construction companies. According to Liu, the company has signed business contracts totaling more than US$40 billion with countries along the Belt and Road in the past three years. A port city program in Sri Lanka, an exemplar in the Belt and Road initiative, would generate 100,000 jobs locally. Another example is the Mombasa-Nairobi Standard Gauge Railway, which would help the Kenyan economy grow from 5.8% to 8%. “The Belt and Road initiative and the emphasis on global connectivity is a prescription that China offers to the world economy,” he said.

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