An employee guides cargo conveyance at the Qingdao demonstration area for economic and trade cooperation between China and the Shanghai Cooperation Organization. [Photo by Tang Ke / For China Daily]

Construction of zone in Qingdao creates new platform for international cooperation under the Belt and Road Initiative

A demonstration area under construction in Qingdao, Shandong province, is expected to add momentum to cooperation between China and the Shanghai Cooperation Organization, as highlighted at the ninth meeting of the Communist Party of China's central committee for deepening overall reform recently.

The building of the demonstration area for economic and trade cooperation between China and the SCO is aimed at creating a new platform for international cooperation under the Belt and Road Initiative and expanding cooperation in areas including international logistics, modern trade, two-way investment, and business, tourism and cultural exchanges, according to the meeting's statement.

The country will promote Qingdao's role in the construction of the economic corridor of the New Eurasian Continental Bridge under the Belt and Road Initiative and maritime cooperation, the statement said.

"It marks China's determination to continue deepening reform and opening-up," said Shen Chi, vice-director and professor of urban planning at the China Center for Urban Development of the National Development and Reform Commission. "Despite the pushback against globalization in the world, China is committed to further opening up instead of pursuing development with the door closed."

Shen said the building of a demonstration area in Qingdao will help boost economic growth in countries and regions along the New Eurasian Continental Bridge.

"Qingdao is a major port city in northern China, with the northwestern China region as its vast hinterland for development. Setting up a demonstration area in Qingdao, the port will extend to more SCO countries, offering them a key gateway to the Pacific Ocean. And it will help boost local economic development and improve interconnectivity among SCO countries," Shen added.

China announced plans to set up the demonstration area during the SCO summit held in Qingdao in June 2018.

Located in Jiaozhou, which forms part of Qingdao, the demonstration area has launched 17 major projects with a total investment of 13 billion yuan ($1.89 billion). Eight new projects are expected to come into operation in the near future.

The demonstration area has a multimodal transportation center, which is well connected to countries and regions involved in the BRI, with 10 domestic and eight international freight train services.

Mei Xinyu, a researcher at the Chinese Academy of International Trade and Economic Cooperation of the Ministry of Commerce, highlighted Qingdao's distinctive geographical advantage, saying it will be a key starting point at the eastern end of the New Eurasian Continental Bridge.

"The SCO was originally created to combat terrorism and protect security, and the organization has effectively accomplished those tasks," Mei said. "Today we are able to expand its role to focus on topics related to economic development. As the world's second-largest economy, China is becoming an increasingly important driving force to boost the regional development of surrounding countries."

Mei said the key is to leverage the decisive role of markets in resources allocation, and SCO countries need to step up efforts to create a better business environment and establish business consciousness.

According to him, the demonstration area will offer China more opportunities to compete globally and provide safe and efficient large-volume transportation services.

A China-Europe freight train departs from the Qingdao demonstration area. [Photo/Xinhua]

Logistics facilities are playing a leading role in the construction of the demonstration area and giving Qingdao easier access to SCO-related countries, said Hao Guoxin, a senior official of the demonstration area.

"The demonstration area has an advantageous position as it takes only about 15 minutes to reach the nearest railway, highway, seaport or airport," said Hao, adding that it has become an important hub connecting Japan, South Korea and other parts of the Asia-Pacific region in the east, Central Asia and Europe in the west, South Asia and the Association of Southeast Asian Nations in the south as well as Mongolia and Russia in the north.

This year, China-Central Asia freight train service has made about 100 journeys.

When Andrey Belousov, a Russian businessman, opened a factory in Jiaozhou in 2000, he did not think transportation to his homeland would be as convenient and fast as it is today.

Belousov's company mainly manufactures pipes for air-conditioners and water heating systems, 95 percent of which are exported to overseas markets.

"Thanks to freight trains, our company's sales have increased substantially," said Belousov.

"Our company can go through customs procedures in Jiaozhou and it usually takes 20 days to transport our goods to Moscow and two more days to St. Petersburg," said Belousov. "Previously it took 35 to 40 days by marine transportation."

His company's products are now sold in more than 20 countries and regions including Russia, Kazakhstan, the United Kingdom, Germany, South Africa and the Middle East.

"My business partners are envious of the favorable transportation conditions here," said Belousov, adding that he spends about 70 percent of his time in Qingdao because of his busy schedule.

From January to June, freight trains transported 352,000 standard containers, an increase of 55 percent from the same period last year.

Now the demonstration area's operators are eyeing more business opportunities.

"Trade enterprises have become a dynamic part of the demonstration area, said Wei Xuelun, deputy general manager of the Qingdao center of China Railway Container Transport Corp.

According to Wei, more than 10 enterprises across the country have set up offices there and over 50 market entities are operating freight businesses. The demonstration area has also signed contracts with trading platforms that usually deal with large amounts of commodities.

Currently, the demonstration area is home to 228 trade companies and has encouraged them to invest in SCO-related countries and expand overseas markets. To date, there are 13 investment projects and the value of their exports and imports has reached $1.08 billion.

From January to June, investments recorded an increase of 35.7 percent and exports and imports increased 14.5 percent from the same period last year.

The first SCO Qingdao Forum on Local Economic and Trade Cooperation and the first SCO International Trade and Investment Fair were held from May 24 to 26 in Qingdao.

The demonstration area has a great strategic significance and can improve trade among the SCO countries and intensify mutual trust and benefits, said SCO Secretary-General Vladimir Norov at the forum.

"The economic potential of SCO countries has not yet been fully developed," Norov said.

During the event, a memorandum of understanding was signed between the Qingdao demonstration zone and Kazakh Invest, a national company that aims to attract foreign investment. Both sides vowed to carry out comprehensive cooperation in construction of the demonstration area, project investment and trade expansion.

Six trade representative offices have been set up in SCO-related countries to enhance economic ties with the demonstration area.

At the same time, an international commercial center has been established to attract chambers of commerce and industry from SCO-related countries.

Employees work at the logistics center of the Qingdao demonstration area. [Photo by Tang Ke / For China Daily]

The demonstration area also offers legal and financial services. A legal service committee has been established to guarantee a fair and efficient business environment. A financial center was unveiled last December and cooperative contracts were signed with 10 financial organizations to launch a fund worth 10 billion yuan.

Zhao Shiyu, director of Qingdao Commercial Bureau, said the demonstration zone will have a big effect on the reform and opening-up process in Qingdao.

The demonstration area offers an unprecedented opportunity for development of Jiaozhou, said Sun Yonghong, Party secretary of Jiaozhou.

"We are exploring new development opportunities and hope our experiences can serve as an example for local economic and trade cooperation at an international level," Sun added.

Shen from the China Center for Urban Development said building the demonstration area is part of China's larger efforts to deepen reforms.

"Once successfully constructed, we can share experiences and set up similar demonstration areas in other port cities along the east coast," Shen said.

During the ninth meeting of the CPC central committee for deepening overall reform, the central authorities also approved a guideline on supporting Shenzhen, Guangdong province, in building a pilot demonstration area of socialism with Chinese characteristics.

In the development of the Shenzhen pilot demonstration area, the statement said it will fulfill the requirements of high-quality development, implement the innovation-driven development strategy, seize important opportunities in the development of the Guangdong-Hong Kong-Macao Greater Bay Area, and strive to create a model city for a great modern socialist country.

Companies in Shenzhen are emerging as leaders in innovation who are pouring resources into research and development and are eager to experiment with pioneering applications.

Huawei Technologies Co has invested about $2 billion in the R&D of 5G since 2009, which makes it a leader in commercializing the fifth-generation wireless technology. Ren Zhengfei, founder and CEO of Huawei, said in a recent interview that "rivals will not be able to catch up with Huawei's 5G technology for two to three years".

The Chinese technology giant had signed more than 50 5G commercial contracts across the world by the middle of July, including 28 in Europe.

Ren also said that without spending on basic science research there can be no knowledge about the future. As part of its broader efforts to attract top-line talents, the company has offered enviable annual salaries of up to 2 million yuan to eight graduates with distinguished records.

Internet heavyweight Tencent Holdings is also making use of cutting-edge technologies to empower ordinary people and make a difference to their lives.

It is using facial recognition technologies to reunite parents with long-lost children. The company partnered with police in Fujian province to help more than 1,000 families find lost relatives last year.

Pony Ma, CEO and chairman of Tencent, said people should work hard to make the best use of technologies to solve social problems and create real benefits.

Tencent's instant messaging platform WeChat is using mobile games to aid poverty relief. The company partnered with the poverty reduction office under the Ministry of Finance to develop a mobile game that allows players to grow and sell agricultural products.

Through sales of virtual products, players earn credits that can be used to secure discounts on an e-commerce outlet for purchases of real goods such as rice and fruits produced by local farmers.