China is advancing mutually beneficial cooperation in industrial capacity with the countries along the routes of the Silk Road Economic Belt and the 21st Maritime Silk Road， and beyond. Having raised innovative concepts and multiple support paths， it will certainly make steady headway despite challenges.
　　Innovative Concepts
　　In the face of the profound and complex changes at home and abroad， especially the increasing pressures from its economic downturn， the Chinese government has taken into consideration the domestic and international situations and is actively guiding the new normal of China’s economic development， of which industrial capacity cooperation is a critical part. China adheres to four principles during its pursuit of international cooperation： attaching equal importance to justice and interests， win-win cooperation， openness and inclusiveness， and market-based operations. These principles are embodied in China’s cooperation efforts， and are compatible with China’s other foreign policy ideas， such as building a “community of shared destiny，” upholding the principle of “amity， sincerity， mutual benefits and inclusiveness” in its diplomacy toward neighboring countries， sticking to “honesty， commitment， amity and sincerity” in China-Africa relations， and adhering to the “correct concept of justice and interests.”
　　First， the efforts to promote mutual benefits and common development with other countries through industrial capacity cooperation incarnate China’s appeal for win-win cooperation. In the context of lackluster global economic performance since the international financial crisis， mid- and high-end manufacturing industries and capital have flown back to developed countries which are promoting “re-industrialization，” with many developing countries encountering a bleaker situation as a result. Taking advantage of its huge foreign exchange reserves accumulated since the launch of its reform and opening-up policy in 1978， China has pioneered a new development path based on large-scale traditional manufacturing and strong infrastructure construction capability and through strengthening outward investment and foreign economic cooperation. The Chinese government has been vigorously promoting international industrial capacity cooperation by combining China’s industrial and capital advantages with foreign demand so as to enhance domestic industrial upgrading and initiate a new phase of opening-up. Currently， a basic pattern of “one axis with two wings” has formed， with major neighboring countries as the “axis，” major African， Middle East and Central and Eastern European countries as the “western wing，” and major Latin American countries as the “eastern wing.” For China， such a pattern marks its shift from “passive reaction” to “active shaping and planning” of the international labor division system， which will reactivate the global industrial chain. With industrial capacity cooperation as a bond， China will also synergize the industrialization and infrastructure development strategies of different countries to build a closer and more extensive relationships of industrial cooperation. 　　China aims to provide Asian， African and Latin American countries with much-needed funds and high-quality industrial equipment for their infrastructure projects and locally-based industrial parks. For developing countries， such kind of assistance from China can facilitate their efforts to break their development bottlenecks， achieve the effect of “teaching a person to fish rather giving him or her fish” and materialize the concept of win-win cooperation. For developed countries， China’s technological development and infrastructure construction capabilities， such as for high-speed railways， offer cost-effective options for their infrastructure upgrading. The combination of industrial capacity cooperation with the introduction of high-end foreign industrial capacity， the effort to deepen industrial and technical cooperation in high-end manufacturing， and the pursuit of capacity cooperation with third parties can benefit partner countries while favoring the transformation and upgrading of China’s domestic industries and expanding its win-win cooperation with developed countries.
　　Second， while industrial capacity cooperation is enterprise-led market behavior， the Chinese government adheres to the correct concept of justice and interests and attaches equal importance to the two aspects to promote common development with partner countries. As a responsible power devoted to maintaining world peace and international justice， China undertakes an obligation to do what it can for late-starting countries.
　　1. The correct concept of justice and interests acts as the principle for industrial capacity cooperation mapped out in the guideline documents issued by the Chinese government and the remarks of leaders and senior officials. At a meeting aimed at promoting the “go global” strategy and capacity cooperation for Chinese manufacturers on April 3， 2015， Premier Li Keqiang highlighted the formation of a new economic pattern through the transition of China’s foreign trade from “extensive imports and exports” to “intensive imports and exports.” In the Guidance on Advancing International Capacity and Equipment Manufacturing Cooperation （hereinafter referred to as the Guidance）， the State Council proposed to “generate good economic and social effects and achieve mutual benefits and win-win development by sticking to the correct concept of justice and interests， fully considering local conditions and actual demands， and emphasizing mutually beneficial cooperation with local governments and enterprises.” Be it “intensive imports” or “intensive exports，” the concept of mutual benefits and attaching equal importance to justice and interests are both embodied in the Guidance document. As indicated by the policy documents and announcements of the Chinese government， the correct concept of justice and interests has become an important element of China’s push for industrial capacity cooperation with other countries. 　　2. In contrast to the West-dominated industrial transfer campaigns， China’s industrial capacity cooperation highlights the concept of “attaching equal importance to justice and interests.” International transfer or capacity cooperation is the product of economic interactions between one country and the rest of the world. The United States， Japan， Germany and other Western developed countries exported industries during the three large-scale industrial transfer campaigns that occurred after World War II. These developed countries tended to transfer their less-advantaged industries （or energy-consuming and heavily polluting industries） to other countries to consolidate their high-end status in the global industrial chain， putting developing countries in a subordinate position in the global industrial division， and forming an international labor division pattern that comprises the “core” and the “periphery.” Such kind of international labor division is also one of the important reasons why many developing countries are trapped in a development dilemma. By contrast， in addition to such traditional industries as steel， non-ferrous metals and construction materials， China’s capacity cooperation also involves such high-end manufacturing industries as aerospace， marine engineering and nuclear power. In equipment manufacturing， engineering construction and operations management， China has also basically achieved a high and even an internationally advanced level. What China transfers to developing countries is its advantaged industries and high-quality industrial capacity， especially green and cost-effective industrial equipment.
　　3. The correct concept of justice and interests is incorporated into China’s concrete capacity cooperation. During its exploration for methods of such kind of cooperation， China is committed to coming to the aid of partner countries in their industrialization and also pays attention to the economic effects and market prospects of these cooperative projects. It not only focuses on the government’s role， but also emphasizes market principles. During a visit to Brazil in May 2015， Premier Li Keqiang put forward the “3×3” model for China-Latin America industrial capacity cooperation， namely making joint efforts to build logistical， electricity and information channels to meet the demands of Latin American countries， forming a market-based cooperative model featuring positive interactions between enterprises， society and government， and expanding funds， credit and insurance financing channels. In this cooperative model， the Chinese government not only provides strong financial support and stresses the role of both sides’ governments， but also emphasizes the need to respect market rules and focus on the building of a “soft environment，” which will not only elevate the industrialization level of partner countries and improve bilateral trade structure， but will also provide a brand-new and operable way for mutually beneficial cooperation between China and Latin America and beyond. From a practical perspective， this model is also an interpretation of the correct concept of justice and interests. 　　Finally， industrial capacity cooperation with other countries reflects the principles of openness and inclusiveness， which provides an important opportunity for global development， especially for developing countries at a time when global economic growth has slowed， Western powers are committed to building a self-dominated regional economic cooperation framework， and geopolitical factors exert a greater influence on the international situation.
　　1. China has provided a broad cooperation space for existing and potential partners in various flexible and diversified forms. The first is the bilateral path， which aims at reaching bilateral cooperation agreements by strengthening synergy with the development blueprints of partner countries. The second is third-party cooperation， which means reaching agreements with developed countries to implement capacity-building projects in a third market. With this path， the capacity advantages of China and the technological advantages of developed countries become complementary to each other. The third path is multilateral， where industrial capacity cooperation is enhanced on multilateral diplomatic platforms. Characterized by a great degree of openness， the above-mentioned cooperative paths welcome the participation of other countries or enterprises outside the region.
　　2. China serves as a bridge during its push for industrial capacity cooperation， providing partner countries with cost-effective projects and reliable and reasonable financial supports by combining high-end technologies from developed countries with mid-end equipment from China. China’s role will help lead the regional and global economic system in an open and inclusive direction.
　　3. China sets no thresholds for the economic or political systems of partner countries， which goes beyond traditional geopolitical considerations and fully reflects the open and inclusive characteristics of China’s industrial capacity cooperation.
　　Multiple Support Paths
　　In its push for industrial capacity cooperation， the Chinese government has set up a solid support system with regard to policy. More importantly， national leaders have devoted themselves to the top-level design， and active interactions between central and local governments have also helped promote the building of transnational cooperation zones and multiple support paths.
　　Summit diplomacy and top-level design. Since the launch of the Belt and Road Initiative， industrial capacity cooperation has become a name card of China’s summit diplomacy， where political consensus can be effectively reached to strengthen the synergy of bilateral policies and a positive atmosphere can be fostered to advance such kind of cooperation. 　　The Chinese government has introduced multiple documents in the form of national strategies to guide industrial capacity cooperation. The above-mentioned State Council’s Guidance prioritizes the tasks in 12 key areas and comprehensively designs policies in 18 aspects. Made in China 2025， issued by the State Council in May 2015， is a top-level design to build China into a high-end manufacturing power. The Action Plan for Implementation of Reform Scheme for Deepening Standardization （2015-2016）， issued in September the same year， points out that China should study and formulate the “go global” scheme for China’s standards regarding industrial capacity and equipment manufacturing cooperation. The Guidance on Promoting the Healthy Development of Financial Leasing Industry published in the same month supports financial leasing companies to explore international markets and provide complementary services for capacity and equipment manufacturing cooperation. The Central Economic Work Conference， convened in December 2015， also states the necessity to strengthen capacity and equipment manufacturing cooperation. The above notions provide important guidance for ideas， partners and industrial selections in industrial capacity cooperation.
　　Inter-ministerial coordination and ministerial-provincial interactions. In China’s industrial capacity cooperation， departments involved in the country’s foreign economic affairs， such as the National Development and Reform Commission （NDRC）， the Ministry of Commerce （MOFCOM）， the Ministry of Industry and Information Technology and the Ministry of Foreign Affairs have worked together on planning and implementation of related projects. The measures taken by NDRC and MOFCOM to support the participation of some provinces through building bilateral and multilateral cooperative mechanisms， designing plans for cooperation with major countries， setting up equity funds， establishing ministerial-provincial coordination mechanisms， creating international platforms such as the exp with the Association of Southeast Asian Nations （ASEAN） and holding specific seminars. Revolving around the key areas， relevant provinces have also introduced the “go global” strategy for local advantaged industries and high-quality capacity to actively mobilize local enterprises in international capacity cooperation. Priorities are given to those countries that fit well with local industries， have a solid foundation for cooperation and show a strong desire for cooperation. 　　Combination of existing and new financing platforms. With the largest foreign exchange reserves in the world and huge domestic deposits， China possesses strong investment capability. The accelerated internationalization of the renminbi offers China a reliable guarantee for its industrial capacity cooperation.
　　China has made the best use of existing development funds to support its capacity cooperation campaign. Some financing platforms such as the China-ASEAN Investment Cooperation Fund and China-Arab Industrial Investment Fund have become supports for capacity cooperation. In May 2014， a Memorandum of Understanding was signed between the China-ASEAN Investment Cooperation Fund and Jidong Development Group， one of the top five cement producers in the world， planning to transfer 10 million tons of cement capacity to the members of the ASEAN within three years and facilitate the construction of projects with 2-billion-yuan investment. The MOU’s signing marked the formal implementation of the Indo-China Peninsula Cement Capacity Transfer Initiative. In addition， new financing platforms on capacity cooperation aimed at specific countries are being vigorously established by China. On December 14， 2015， a framework agreement was signed between the Silk Road Fund and Kazakhstan Export Investment Bureau on a special $2-billion fund for China-Kazakhstan capacity cooperation， the first set up by the Silk Road Fund since its founding. China has also launched similar funds at the regional level. In September 2015， China set up the China-Latin America fund on capacity cooperation， with its initial capital reaching $10 billion. In December of the same year， the establishment of the China-Africa fund on capacity cooperation was announced， with an initial capital of $10 billion. On January 21， 2016， President Xi Jinping announced in Cairo that China will carry out capacity cooperation with Arab countries， including setting up a special loan of $15 billion for industrialization in the Middle East， and offering Arab countries a commercial loan of $10 billion to support bilateral capacity cooperation.
　　Building industrial cooperation parks. According to the Fifth Plenary Session of the CPC’s 18th Central Committee， China should improve its strategic layout and advance opening-up， supporting coastal areas to fully participate in global economic cooperation and competition， fostering advanced manufacturing bases and economic zones with global influences， and elevating the development of border-area and cross-border economic cooperation zones. The construction and development of industrial cooperation parks provides important supporting platforms. 　　Targeting specific countries and considering their trends of industrial transfer and investment preferences， industrial cooperation parks realize labor division cooperation and the clustering of high-end projects through cooperation at the governmental， industrial park and enterprise levels. Such parks are usually initiated by one or several Chinese enterprises which establish economic and trade cooperation zones outside China. Once the dominant industry takes root， related industries up and down the chain can also go global. Currently， the “two countries， two parks” model between China and Malaysia has become a model of capacity cooperation. Since 2012， the China-Malaysia Qinzhou Industrial Park and Malaysia-China Kuantan Industrial Park have opened in succession. Competitive industries from both countries have clustered in the parks through accelerated building of cross-border industrial and service chains， encouraging China’s technologies and industries to go global and attracting traditionally competitive industries from ASEAN countries. The Ethiopian government has listed the construction of the Oriental Industrial Park invested in by China’s private enterprises as part of its sustainable development and poverty alleviation plan. So far， some Chinese enterprises have entered the park. In Belarus， Zoomlion entered the China-Belarus Industrial Park， which is a flagship project of Silk Road Economic Belt in May 2015. The first mounting equipment jointly produced by Zoomlion and Belarus’ MAZ Group come off the assembly line on December 30 the same year. These industrial parks constructed by Chinese enterprises in different areas have laid a solid foundation for China’s industrial capacity cooperation.
　　Prospects
　　Propelled by its foreign investment and economic cooperation projects， China’s campaign of industrial capacity cooperation will proceed steadily. In 2015， a total of $7.04 billion of China’s foreign direct investment flowed to the equipment manufacturing industry， a year-on-year growth of 154.2 percent， testifying to the speed and actual effects of China’s push for capacity cooperation. China’s foreign investment in manufacturing， especially equipment manufacturing， continues to rise， which will accumulate more momentum for cooperation. In the long run， with a continuous increase in the number of cooperative projects and ever-closer economic ties with partner countries， the integration of interests between China and neighboring countries， developing countries and even many developed countries will inevitably deepen. Industrial capacity cooperation and its achievements will strengthen the symbiotic relationship between China and related countries， and consolidate the basis for China’s global partnership network. 　　Apart from some non-commercial risks with regard to other countries’ politics， security and laws， industrial capacity cooperation is also subject to negative opinions in Western countries and constrained by the bottleneck brought about by the structural upgrading of China’s domestic capacity.
　　First， some countries have criticized China for exporting excess and backward capacity to developing countries. Despite the current overcapacity in China’s manufacturing industry and the huge pressure faced by some Chinese enterprises to resolve this issue， China is by no means exporting backward capacity to developing countries. In an open global trade system， if manufacturing powers’ overcapacity cannot be solved through foreign trade， and other countries also lack comparative advantages in this industry， this industry can be considered to have worldwide overcapacity and thus cannot be exported. Nowadays， with green development becoming a global consensus， stricter environmental standards in developing countries， stronger awareness of environmental protection among the people， extensive supervision from environmental groups， and increasing attention from Western media， the transfer and construction of polluting projects is under huge constraints. It is false to assume that China is exporting high-polluting industries during its capacity cooperation. Given that exporting domestic overcapacity inevitably involves huge costs， from dismantling equipment， transporting it， assembling it and then operating it， the economic efficiency of this process itself is dubious. The core of capacity cooperation is to transform China’s exports of products into exports of industries and capacity， providing partner countries with capacity in which China enjoys advantages， and so boosting the industrialization of developing countries and offering developed countries cost-effective infrastructure projects， thus realizing mutual benefits， reciprocity and common development.
　　Second， some developed countries have regarded China as a rival since the capacity cooperation campaign launched by China has helped increase its share in the international market and raised its status in the international economic system. For example， in their pursuit of third-party cooperation， Chinese enterprises hope to utilize France’s business resources and networks in third-party countries， and intend to set up a cooperation fund with the European Union， Belgium and France to support relevant investment projects. However， there are some in the European Union that view China’s rising share in the international market as direct competition for EU enterprises， which may restrict the effects of capacity cooperation in some markets. 　　Third， China’s bottlenecks during the upgrading of its capacity structure have necessitated the introduction of high-end capacity to fill the vacuum in its high-end manufacturing while going global. Some developed countries have taken measures to revive and upgrade their manufacturing industries， such as “re-industrialization” in the US and “Industry 4.0” in Germany， while some developing countries are also vigorously promoting the development and upgrading of their own manufacturing sector， thus confronting China with a double challenge. Given this， China should not only effectively export its high-quality capacity， but should also actively introduce domestically demanded high-end capacity to consolidate and improve its overall competitiveness in manufacturing.
　　Generally， China needs to further clarify its stance on and goals for industrial capacity cooperation and advocate the principle of win-win development especially between developed and developing countries. Domestically， China should deepen the reform of its overseas investment management， strengthen independent innovations to enhance its own capability for cooperation and elevate both the scale and quality of the high-end capacity introduced， thus facilitating the steady development of capacity cooperation and domestic industrial upgrading.