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How Local Governments in China can Utilize New Infrastructure Policy to Promote Development

Chan Kung

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Authors: Chan Kung and Wei Hongxu*

In an effort to promote economic recovery, the central government, local governments, and enterprises have placed high expectations on the investment of new infrastructure, hoping it would promote the development of the digital economy, so as to enhance the internal driving force of economic development. Especially when the scale of local special bonds is expected to be increased and again issued ahead of schedule, many local governments hope to seize the opportunity of digital economy development and increase investment in new infrastructure areas to drive regional economic development. Unlike the conventional economy and conventional infrastructure investment, the new infrastructure is not a simple way to boost investment, but rather to help the conventional industries realize digital and intelligent transformation as soon as possible, and to create new consumption, new manufacturing, and new services. While the new infrastructure investment brings a new economic model, it is different from the past in terms of content, mode, and financing channels. It requires local governments to make corresponding changes with market-oriented thinking.

New infrastructure investment is not only the demand side of local users, but also the supply side of technology investment. From the perspective of the scope of new infrastructure, new infrastructure projects include 5G base stations, ultra-high voltage (UHV) electricity, industrial Internet, intercity high-speed railway, intercity rail transit, new energy vehicle charging piles, artificial intelligence, and Big Data centers. At present, rail transit and new energy infrastructure are not much different from conventional infrastructure investment. The degree of local participation of UHV electricity is limited, while the investment in other aspects, such as 5G base stations and Big Data centers, is relatively mature in technology and has good market supply capacity. In other aspects, it is more necessary to start from the aspects of technology research and industrial cultivation, and to invest in projects that encourage innovation and industrial park construction. Therefore, this requires not only clear investment objectives on the demand side, but also needs to expand the supply side such as technology research and application at the same time, which undoubtedly increases the complexity of new infrastructure investment.

At the same time, the sources and financing channels of new infrastructure investment still need to be explored. Recently, local governments in China have begun planning to finance new infrastructure projects through issuing special bonds, and many local governments have put new infrastructure projects on their agenda. Some market analysts believe that at present, 5G is still mainly invested in base stations. Generally, telecommunications companies such as China Unicom and Mobile Communications can invest on their own without issuing special bonds, thereby the special bonds can be invested in projects related to data centers. However, such projects are only available in first-tier cities, and there are not many such projects in second-tier, third-tier, fourth-tier, and fifth-tier cities. New infrastructure projects should be more market-driven and local governments should avoid excessive involvement via direct investment in industrial projects. Local governments also need to promote the public-private partnership (PPP) model and introduce more social capital to improve efficiency and broaden financing sources.

Even for new infrastructure projects funded by special bonds, attention should be paid to the financing capacity of the projects to avoid adding to the financial burden. There are two main ideas for the new infrastructure special bond declaration projects in many provinces. One is to build a digital information application platform at the county and district level based on the resources of the provincial and municipal cloud platforms. The second is to promote the optimization and upgrading of conventional infrastructure projects with the theme of digital and wisdom. Some local finance people worry that many of these projects are packaged around the concept of “new infrastructure” and are mostly non-yielding or low-yielding projects that may require the government to cover future bond payments. Therefore, the special bond for new infrastructure construction should be invested in public welfare projects that can generate income, rather than public welfare projects that do not.

At the same time, there are new requirements for investment entities in new infrastructure investment. Some financial institutions said that after the issuance of new infrastructure special bonds, most of them will eventually be invested in local urban projects. However, local urban projects were good at conventional infrastructure construction, unfamiliar with new infrastructure construction, and lacks experience in new infrastructure project operation. If we speed up the construction of new infrastructure projects without considering the actual situation, it will easily lead to the mismatch between the capacity and the project requirements, and drag on the development of local governments and enterprises. In particular, unlike conventional investment in forming fixed assets, a considerable part of new infrastructure investment in research, personnel training, and other forms of intangible assets will be formed. The conventional urban investment model does not have the ability to use and dispose of these assets. At the same time, the large amount of hardware equipment invested in the new infrastructure is different from the conventional “iron and steel foundation”. Its wear and tear, operation, and upgrading all require continuous follow-up investment, which cannot be “invested all at once.” These are also not available in some conventional urban investment enterprises. If the local government cultivates and supports relevant enterprises by means of industrial investment, it needs more consideration in terms of income distribution and asset management. Such investment cannot be simply measured by the unit of land and capital, but more in the form of equity investment such as industrial funds and venture capital. In this respect, the local government needs to have the investment entities and relevant personnel with the ability to invest in relevant industries.

Different from the past, local governments need to play their roles in market construction and maintenance, investment entities, and end-users in promoting new infrastructure investment and the development of the digital economy. In the cultivation of the digital market, market demand, and the maintenance of the market order, local governments should play the role as a supervisor, take the development of the market as the guide, and develop the local digital market. In terms of investment, it is necessary to start with basic research and development and personnel training, promote market-oriented investment and technological innovation to enhance the competitiveness of the digital industry. In terms of end-users, it is necessary to integrate their own digital resources, establish a public digital space, and expand digital demand with the digital transformation of public services and government affairs as the direction. These three new roles are the basic problems to be solved in the process of promoting new infrastructure.

While much attention has been paid to new infrastructure, the reality is that, in terms of overall size, it needs to be recognized that infrastructure investment is still dominated by conventional infrastructure projects, with new infrastructure as defined by the market accounting for less than 15%. ANBOUND is not a proponent of separating infrastructure from the old and the new, so one cannot fully “bet” on new infrastructure to revive the post-pandemic economy. From the perspective of economic development trends and current reality, the role of new infrastructure is to promote the coordinated and integrated development of digital technology to industry and regional economy. Therefore, local governments need to make good use of fiscal expansion policies and financing tools to build new infrastructure, rather than investing for investment’s sake, they need to pay attention to the trend of economic digitization and promote the market efficiency and the expansion of market space.

Final analysis conclusion:

Promoting economic recovery and the development of the digital economy with new infrastructure are the keys to current macro policies. In this regard, local governments need to pay attention to the differences between the new infrastructure and the conventional infrastructure model, and they need to make corresponding adjustments in the investment model and development thinking so as to give full play to the efficiency of the digital economy.

*Wei Hongxu, graduated from the School of Mathematics of Peking University with a Ph.D. in Economics from the University of Birmingham, UK in 2010 and is a researcher at Anbound Consulting, an independent think tank with headquarters in Beijing. Established in 1993, Anbound

Founder of Anbound Think Tank in 1993, Chan Kung is now ANBOUND Chief Researcher. Chan Kung is one of China’s renowned experts in information analysis. Most of Chan Kung‘s outstanding academic research activities are in economic information analysis, particularly in the area of public policy.

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Economy

Coronavirus Impact On The World Of Work Traverses National Borders

Dr. Arshad M. Khan

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With the coronavirus lockdown, one aspect of our lives has been revolutionized … the world of work.  Computers have facilitated the transition and the coronavirus forced a real-life test.  For jobs where it is possible, we are working from home and many of us like it that way.

There are countries that have been doing it long before the coronavirus — at least in numbers far in excess of other industrialized countries.  In the Netherlands 14.1 percent of workers say they usually work away from the office compared to 4.7 percent in the UK and only 3.6 percent in the US.  Only Finland is comparable.  

Finland also allows flexible hours.  Indeed such flexibility has a basis in law ever since the 1996 Work Hours Act giving most workers the right to adjust workplace time.  Thus 92 percent of companies allow flexible hours there (a notable example being an employee who works remotely from Malaga, Spain!) compared to about three-quarters in the US and UK, a half in Russia and only 18 percent in Japan.   Employees can start or finish their workday up to three hours earlier or later.  A new Working Hours Act came into effect on Jan. 1, 2020 through prior legislation, fortuitously given Covid-19.  This now permits workers to schedule up to half their working hours away from the workplace.

Both Finland and the Netherlands also benefit from a culture of trust and equality; also practicality, a quality that small countries nurture to compete with the giants beside them.  Think Russia in one case and Germany for the other.

Flextime has other benefits.  Studies report higher output and efficiency.  When workers are allowed to pick their hours, they drift towards when they want to work.  In Finland, they still have to average 40 hours per week over each four-month period.  Nevertheless, working at a time most suitable for their individual circumstances implies they are working at their best, which also translates to most productive.

HSBC, the large UK bank, looked at what is driving UK productivity growth in a 2018 study.  Eighty-nine percent of respondents cited the importance of flexible working hours and work-life balance rating them higher than financial incentives.  One-in-five also cited poor work-life balance as the main reason for leaving a prior job, ranking it higher than limited opportunities or salary increases.

Meanwhile in the Netherlands, where 98 percent of homes have high-speed internet access, there is also a culture of trust, plus a combination of technology, attitude and expectation to make remote working a success.  King Willem-Alexander issued a photo of himself working from home to encourage others to do the same during the pandemic.

But then, the Netherlands is different.  ING, an Amsterdam-based bank, is now trying out a policy of unlimited vacation time for pilot groups of workers.  They can take as much time off as they want provided their work and set tasks do not suffer.

There must be something in all this for Dutch men averaging 163 cm (6 feet) are the tallest people on earth.  At 179.6 cm, the Finns are not far behind. 

Perhaps employers over here in the US will be enlightened by the statistics.  If there is a silver lining in this dark coronavirus cloud then, it could be in the world of work.

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Covid-19 and its impact on Belt and road initiative and CPEC

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Nowadays, Covid-19 is increasing rapidly in Pakistan. As of June 30 the amount of confirmed cases had risen to 208359 along with 4254 deaths. Tremendously a very bad situation of Pakistan economy as well as global economy due to this pandemic era. Coronavirus effects many business and major Flagship project in Pakistan like CPEC development due to shortage of local labour. The China-Pakistan Economic (CPEC) is a part of ambitious Belt and Road Initiative (BRI) which runs through South-East Asia, South Asia, Central Asia, Russia and Europe by land as well as 21st century Maritime Silk Road, a sea route flanked by China’s coastal regions with South-East and South Asia, the South Pacific, the Middle East and Eastern Africa, all the way to Europe.

The China-Pakistan Economic Corridor badly effect and now most of the people concerned about CPEC development and its impact of covid-19 on development projects. Specifically the CPEC development were also stopped because of the absence of local labour who were forced to stay at home due to lockdown and  to avoid further spread of Covid-19. In addition, the government of Pakistan and china also announced the travel restrictions which delayed the availability of workforce. All business areas and business centers in the port of Gwadar are completely closed, and the impact of all these problems on CPEC and its branches. But there is encouraging news that the port of Gwadar is still operating under strict policies.

Covid-19 has already had a significant impact on the global economy, influencing production, supply chains and the movement of people and goods. Since the outbreak and increasing the cases of corona virus, many people concerned about the impact of covid-19 on CPEC development projects. Most of the people says it has no impact but some people says it has huge impact on development of CPEC. As per my opinion it has a huge Impact on CPEC development. According to the challenging situation Chinese government decided to work again on BRI projects. Chinese government believe that once the pandemic crisis is over BRI projects will lead the world economy recovery and sustainable development.

As our honorable PM Imran Khan said multiple time that corona virus is not going anywhere, we have to live with this epidemic situation following SOP otherwise survival in Pakistan is much difficult as compared to developing and developed countries. If all Factories, industries, and development teams closed for certain time, Pakistan economy will goes down for sure and people will die due to hunger and unemployment. Consequently, the Pakistan Government is in full consultation with the government of China as well as Chinese companies working on the CPEC projects. In this regard, Pakistan government is taking preventive measures and providing full protection to Chinese workforce on CPEC. In addition, the Chinese workers who are returning to Pakistan have to endure double quarantine system for their safety as well as the safety of other workers too.

Contemporaneous, we must be aware of the fact that there is a force in the world that does not want to see CPEC’s success, so they indiscriminately amplify the impact of the pandemic on CPEC development. The Chinese and Pakistan government both nations agreed to continue this project and overcome difficulties caused by Covid-19 and support CPEC construction. Both governments have upheld close communication and coordination on particular issues of CPEC projects. Chinese companies have implemented closed management, and all CPEC projects have maintain prevention and control plans and implemented them very strictly, therefore effectively preventing the invasion of the novel coronavirus. As far as I know, there is no Covid-19 spread at the construction or development sites.

In addition, the Chinese companies contributing in the construction of CPEC projects are also actively making assistances to the prevention and control of the pandemic in several locations in Pakistan, donating material to local government’s offices, schools, and hospitals. When the world suffering from corona virus, china was there for supplying material and help to various nations in the form of medical equipment, protection accessories and medical supplies. It’s a bit challenging circumstances in China in pandemic situation but china prove his kindness in front of other nations that increased the trust of countries in China.

It is still unclear situation when local and global economic activities become stable, which also creates uncertainty about the feasibility of these projects. In the same way, other cross-border corridors and the Silk Road Belt and Road Initiative (BRI) are also facing delays and cancellations. Despite difficult circumstances, the Chinese are promoting BRI, gradually resuming development work and building the health Silk Road. Beijing China is much confident that BRI will lead the global economic recovery after resolving the crisis.

The most common broader issue nowadays is whether the planned BRI projects can be delay in the current economic environment. For instance, it was recently stated that nearly seven to eight years after the creation of CPEC, less than one-third of the development projects had been completed. Since sustainability of financing for BRI projects is already a challenge, and Chinese capital projected to be organized to meet the basic and domestic needs, the pandemic and the resulting slowdown in economic growth will be even more delayed and could even be a death sentence for Some Belt and road Initiative projects as well as CPEC.

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Economy

Pandemic Recovery: Empowerment of Women Entrepreneurship

Naseem Javed

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Jocelyn Hobbie

A new world unfolding by the day, new economic thinking emerging by the hour, late comers to digital-age panicking by the minutes; new value systems measured and women’s role on grassroots prosperity re-defined as fastest trajectory. The largest untapped and hidden potential of any nation today by all counts the underexposed entrepreneurialism of women. Pandemic recovery has no room for such ignorance, truth must get unmasked and large-scale actions on role of women entrepreneurialism on national economic recovery immediately deployed.

Nations missing 50% of their working citizenry’s talent are blindly pushing national economy as a one-wheel cart. What are the immediate key requirements to mobilize the empowerment of women entrepreneurship?  Here are the unstoppable cyclones

For the first time ever in the history, there are far too many women in colleges and universities, in science, technology, engineering and mathematics subjects, plus as individual business owners, entrepreneurs or executives in small, medium or large organizations, including top government officials and as national leaders. So what just happened?

For the first time ever in the history, educated parents across the world supported down streaming of organized quality education on their children, rain of almost free technologies brought information and knowledge at doorsteps. Businesses around the world started globalization opening new cities and towns and now the zoomerang effect of remote working via video-conferencing created a new easy access universe of women. So what is next?

For the first time ever in the history, the women of the world ever assembled in big or small circles all connected on global digital platforms and connectivity making the largest combined group. They now know well, how to take next steps and are well equipped to venture out onto micro to mega projects. The global mindshare amongst educated smart STEM women have just become a call of time to national economic advancements.  So how will this unfold?

For the first time in the history, the long awaited time for all women entrepreneurial groups in five continents to come together on similar page, common language and similar platforms.  Is it possible now, business-women associations and women chambers of commerce and special groups to all rise up and join forces under larger umbrellas of digital platforms where they multiply their local, national, global reach and also use upskilling and reskilling as way to quadruple innovative excellence and exportability and shine? In addition, why not and what is stopping this?

What is missing depending of nations, open and bold dialogues to bring business and STEM women under large economic development umbrellas? Is it about time that woman entrepreneurs finally join hands, become a humongous national global force and powerful voice on world stage, and not left behind as 1000 small splintered groups lost amongst 200 nations?

Three Major Trends:
Understanding collaborative synthesizim:
our broken and fragmented economies splintered amongst 200 nations and 10,000 cites need the glue of collaborative synthesizim.

Understanding real “value creation” over “value manipulations”: our economies of small and medium businesses are required to measure real value creation as direct productivity and exportability to boost grassroots prosperity.

Understanding “soft-power-asset-management”: our prime occupation with “hard-asset-mentality” must blend with imagination, creativity to multiply growth and global-age speed of operations

Three Major Challenges:
How difficult
is it for women organizations to leave local and internal politics aside, seriously evaluate all current offering, and seek beyond on larger national/global platforms.

How challenging is tit for the leadership of women organization to boldly enlarge vision befitting global stage and spin out from local agenda events to major global advancements issues.

How complex is for the entire membership of any large or small women group to face the truth on national and global image and identity confusions and make creating professionally managed Intellectual Property digital assets as name brands, protectable trademarks, and domain name websites to skate around the world.

Three options; study deeply

How do you re-calibrate into an international organization, with little or no extra cost. This calls for fresh new thinking to scale up organizational structure paralleled with digital platforms to reach higher level of connectivity.

How to build global teams via collaborative alliances, attracting big and small groups and umbrella thinking on global goals advancements and creating highly smooth events and operational systems.

How do you achieve mastery by offering real value to all members, as this the most difficult challenge and calls for detail analysis of the principal objectives and offerings and a real match of leadership capabilities to drive the agenda forward.

The futurism is workless:
This is a new ocean now in need of trained swimmers and skilled scuba divers.

Top key questions: are women business sectors ready for national mobilization of entrepreneurialism on digital platforms?  Is there a national agenda to quadruple innovative performance of women and drive exportability? 

Top key solutions: How simultaneous synchronization of upskilling of 10,000 to 100,000 results in growth on a fast track basis? How roundtable discussions live streamed to top 1000 to 10,000 stakeholders instantly create a national umbrella? How identification of few VIP candidates on nationwide collaborations on global digital platforms will start action? Why high power round-table events zoomed live across 1000-10,000 selected viewers instantly makes the topic a national agenda. Study Pentiana Project on how 100,000 SME on digital platform of upskilling shine and grow.

To become the second missing wheel to fix the national economic cart is now new art and science

The rest is easy

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