Party School of CPC Chongqing Municipal Committee

“The Belt and Road Initiative” Reshapes the Investment Pattern of Chongqing

Party School of CPC Chongqing Municipal Committee

“The Belt and Road Initiative” made by China is a signifi cant strategic decision aiming at dealing with the global situation changes and coordinating the domestic and international situations， among which the construction of connecting the north-south and the east-west channels， and the creation of a new platform for international trade investment cooperation and opening are the main focus of the domestic segment. Chongqing is located at the Y-shaped junction of the Silk Road Economic Belt， China-Indochina Economic Corridor（connecting the 21st Century Maritime Silk Road） and the Yangtze River Economic Belt with unique geographical advantage of joining the east and west and connecting the north and south. Participation in the construction of “The Belt and Road Initiative” will help to promote the orderly free fl ow of economic factors， efficient allocation of resources and deep integration with market. Meanwhile， it will advance a regional cooperation with a wider scope， a higher level and a deeper level， influencing and reshaping our investment pattern in a profound way.

I. The Cooperation and Investment Potential of Chongqing with the Countries and Regions along the Belt and Road

Having accumulated strong capital and technical strength in fi elds of equipment manufacturing， infrastructure and electric power equipment， Chongqing is able to meet the needs of all countries along the line and has the great potential to go out. At the same time， our country is looking for new economic growth momentum to adapt to the new situation by virtue of accelerating the reform and opening up while facing the transformation from high-speed economic growth to high-middle speed growth， economic restructuring and transformation and upgrading， the change of investment and free elements driving the economic growth into the innovation- driven economic growth. “The Belt and Road Initiative” （hereafter referred to as “B & R”） has provided relatively plump soil for the investment and cooperation，and it has also become an important engine of the next round economic development of China and Chongqing. We will have the eastern coastal areas to take the lead in opening up and developing， and then promote it in driving the development and opening up of the hinterland， take the initiative to contract to build infrastructure of domestic and foreign traffic and ports rather than depending only on the rivers to go to the sea and the roads to go abroad， and build a prosperous economic corridor originated in various provinces and cities in China， connecting Central Asia， Southeast Asia，South Asia， West Asia and parts of Europe， enjoying the longest span and covering about 4.4 billion population of the world， and at last creating a new pattern of all-round opening and common prosperity of all nations along “B & R” on the basis of connectivity.

Under the background of “B & R”， Chongqing will be able to cooperate with Germany and other EU countries in the fields of high-end technology， new equipment， new energy and new materials， and form strategic emerging industry investment of advanced manufacturing by means of the favorable opportunity of investment driven by business exchange and interaction. We will carry out exploration and financial cooperation with the central and East European countries to build “China-Hungarian Liangjiang Center for Entrepreneurship and Innovation”， and actively dock the fund of the Silk Road. We will deepen the cooperation with the Commonwealth of the Independent States， such as Russia，encourage resource-based heavy industries of Chongqing，like chemicals and mineral to enter Russia， and at the same time introduce the advanced Russian technology in the fields of general aviation and material. We will strengthen cooperation with countries in South and Southeast Asia，foster an expanding pattern of foreign investment based on the success of the third intergovernmental cooperative project between China and Singapore in Chongqing， and encourage the advantageous enterprises in Chongqing such as Chongqing automobile， chemical industry， materials and energy to expand to the South and Southeast Asia. In addition， as to the construction of the Yangtze River Economic Belt， Chongqing will carry out differentiated industrial cooperation with the surrounding region and the riverside area， undertake industrial transfer， nurture worldclass industrial clusters， promote industrial upgrading and bring a new round of investment. At the same time， we are advancing clearance integration reform pilot in regions along the Yangtze River and looking forward to a greater range of large clearance cooperation and paperless electronic customs clearance.

II. New Opportunities for the Local Investment in Chongqing Brought by “B & R”

In the fi eld of traffi c infrastructure construction， the investment roads， airports， railways and other aspects directly brought by“B & R” in Chongqing will mount up to 1.2 trillion yuan. At the same time， Chongqing promoting public-private partnership（PPP） and other investment modes will provide all types of market players with opportunities for participation. Taking Chongqing as an example， the goods in the eastern part can be transported through the Yangtze golden waterway or railway and then conveniently sent to Central Asia， Russia and the whole Europe based on the Chongqing-Xinjiang-Europe Silk Road. The above infrastructure construction has provided an important strategic opportunity for Chongqing to speed up the comprehensive three-dimensional transportation planning and construction， the construction of integrated transport hub in the southwest region and the building of the shipping center on the Yangtze River upstream.

In the fi eld of industrial development， more and more eastern industries have been westward shifting， while Chongqing will undertake more second industries and create demands in raw materials and products transportation. As for the building demand and new market demand of the “The Belt and Road Initiative”， Chongqing is able to achieve agglomeration of

factors and innovation driving with the help of the laptop and auto industries clusters， which in turn will help the city to have a new leap forward from “Made in Chongqing” to “Innovated in Chongqing” and provide strong support for local development in “13th Five-Year Plan” period and the future.

In the fi eld of port economy， Chongqing will give full play to the comprehensive and cooperative functions of its three waterland-air hubs， three ports， and three bonded areas to improve the port energy level. We will strengthen the port function of Guoyuan Port， Chongqing-Xinjiang-Europe channel in finished automobile import and establish coordinated operation mechanism of water-land-air ports. We will develop and upgrade open platforms in areas without ports and plan multi-point bonded warehouse. We will devote greater efforts to building fi nancial settlement center in Chongqing through the establishment and improvement of exploitative financial service system and cross-border investment-fi nancing service system.

III. New Impetus for Foreign Investment of Chongqing Brought by the Construction of “B & R”

By feat of “B & R”， Chongqing foreign investment “Going out” strategy will be fueled by four impetuses， and different patterns along the Belt and Road will be formed.

First， the spontaneous attraction of return on market investment. When it is required to fi nd markets in the world for the local overcapacity， the elements of marketing channels，products and even technology will extend to the countries along the Belt and Road depending on the enterprises' spontaneous power. The infrastructure capacity and the existing manufacturing capacity of Chongqing will form echelon diffusion pattern.

Second， the impetus of the resource factor. All types of market players in Chongqing need to seek the global allocation of resources when participating in international competition and obtain the strategic and basic resources along the Belt and Road， such as all kinds of commodities and energy resources. In addition， “capital integration” brought by differences in capital cost will form a direct impetus for the foreign investment of Chongqing.

Third， competitiveness brought by the comparative advantage in cost. As the costs of various elements in Chongqing have been increased gradually， Chongqing will be confronted with many constraints in terms of manpower intensive industriesand industries with environmental pressure. However， along the Belt and Road are a large number of countries and regions with elements of low cost， which will help Chongqing to build industrial competitiveness and increase the return ratio on all kinds of industrial investments.

Fourth， new income space from investment with the aid of effi ciency advantage. In order to achieve the transformation from the investment drive to innovation drive， Chongqing must implement the strategy of “going out”. With the aim to obtain the latest ideas， concepts and practices and carry out massive management and application of “Introduction”，Chongqing should especially set up R & D center， design center， talent center and counseling center in Southeast Asia （Singapore）， and keep close touch with the knowledge accumulation， technological progress and high-end talent.

“The Belt and Road Initiative” has directly channeled impetus into reshaping Chongqing's investment pattern. From January to June in 2016， Chongqing has increased 23 new investment projects for international cooperation capacity and achieved investment contract amount of $520 million， an increase of 7.7 times. The actual investment in international capacity cooperation fi eld has mounted up to $270 million， increased by 4.3 times. At the same time， the foreign investment of Chongqing enterprises to the countries along the Belt and Road enjoys a the rapid growth. During the same period，Chongqing enterprises have invested and set up a total of 18 enterprises in 11 countries along “the Belt and Road”. The newly increased contract investment amount is $370 million， with a like for like increase of 24.9 times. In addition，there are 8 new investment destination countries. And the newly established enterprises are increased by 15 over the same period last year. In the investment pattern， state-owned enterprises have played a great role in direct investment to the countries along “the Belt and Road”. Non-fi nancial direct investment from state-owned enterprises has accounted for more than 52%， an increase of 19.1 percentage over the same period.

IV. Chongqing Enhancing the Participation of Multi-subjects in “B & R”

The huge demand for investment in the “B & R” construction is not able to be met with depending only on the governments along the Belt and Road. With the stable advancement of “the Belt and Road Initiative”， “Beijing-Tianjin-Hebei Integration”，the Yangtze River Economic Belt strategy， etc， the domestic infrastructure construction needs huger fi nancial support. In this year， China has proposed that the government will not play the one-man show， and will stimulate the vitality of private investment and guide social capital to invest in more areas.

The public-private partnership （PPP） promoted by Chongqing is one mode to attract private capital to participate in infrastructure investment. Moreover， all kinds of private capital are invested to the “B & R” construction through the establishment of trust， theme fund and other ways. In addition to private capital， bank credit funds can also make a difference in supporting the construction of all kinds of major transport projects in Chongqing； exploitative fi nancial model will be developed to provide long-term debt capital， reduce the cost of market players on obtaining funds and shorten the time limit.

Under the background of “The Belt and Road Initiative”，Chongqing has adopted a series of measures in providing guidance and guarantee for multiple investment subjects， the details are as follows：

Firstly， strengthening the status of enterprises as the subjects of investment. Chongqing will minimize the approval scope on enterprise investment. According to the enterprise investment project approval directory issued by the State Council，Chongqing has timely revised the directory of Chongqing and stipulated that “approval on any enterprise that can decide on its own， any investment that can be effectively regulated by the market competition mechanism and can be afterwards regulated and indirect managed must be cancelled”. “The investment matters that are not explicitly defined by all national and municipal government to be approved by the municipal level and above all， shall be delegate to the district （county） government for approval”. Chongqing will establish differentiated and characteristic investment-oriented mechanism by combining the five major functional regional development strategies in Chongqing and setting up access control by virtue of the standards of the environmental capacity， resource conservation， technology and safety standards. In addition， Chongqing will strictly investigate the industries with excess production capacity. At the same time，Chongqing will further improve the management of enterprises in investment record. The enterprise will be able to make independent decisions and responsible for profit and loss，as well as risks. Record management is a service measure only to confi rm their investment behavior and legally protect the legitimate rights and interests of investors. According to the requirements of the national treatment and a negative list for foreign investment projects and oversea investment projects before access， Chongqing has revised and improved

measures of approval and record management for foreign investment and overseas investment projects.

Secondly， encouraging the market investment and innovation，especially venture investment of private capital. Centering around developing mixed ownership economy， Chongqing will innovate the investment and fi nancing system of stateowned enterprises， actively introduce strategic investors to achieve equity diversifi cation， and promote the overall listing of the enterprises meeting the requirements. Chongqing will establish infrastructure fund and industry guidance fund to promote social capital investment. Meanwhile， Chongqing will encourage and guide the various types of investors to obtain the franchise rights granted by the government and carry out the construction and management in a certain period of time and scope. Also， Chongqing will implement public-private partnership model and reasonably define the income of various types of capital investment. The municipal investment department will take the lead in formulating measures for administration of urban public utility franchise and deliver good performance in investigating and supervising the implementation of the franchise projects.

Thirdly， improving and enhancing the accuracy of the government as the subjects of investment. Chongqing has regulated that the government investment will gradually withdraw from the competitive industry and mainly shift to infrastructure， public goods or public services and other fields. As for the public services or public goods that must be provided by the government and in which the market mechanism is not able to play an effective role， the government investment projects should be constructed and managed with the financial capital investment. After the projects meeting certain requirements， the market mechanism should be encouraged to play an active role in attracting entrusted management of social capital or procurement services of the government. At the same time，as to the infrastructure projects invested by the government，the capital ratio standard should be greatly upgraded in accordance with the industrial substantial （accounting for 40%-60% of the total investment）. Trials will be made to employ the third party organization to carry out the investment control mechanism in the whole process. And construction management agent system will be implemented in the whole process of construction from the design to the completion.

A View of the East Terminal Area and the Third Track of Chongqing Jiangbei International Airport （Picture from Chongqing Jiangbei International Airport）