China’s Belt and Road gains momentum

China’s landmark Belt and Road Initiative is gaining greater impetus and is creating a new Silk Road.

9 March 2018

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    The landmark Belt and Road Initiative (BRI) is now gaining greater impetus, with 67 countries partnered with China to create a so-called new Silk Road. With the initiative enshrined as an official policy in the Communist Party’s constitution,1, 2 China’s government, as well as its public and private enterprises, are working out how best to put this strategic vision into practice.

    “The BRI will be the main driving force behind global economic growth in the next 20 to 30 years,” explained Che-Ning Liu, Co-head of Global Banking for Asia-Pacific at HSBC. “It is also one of the main cornerstones of HSBC’s global strategy.”

    HSBC is seeing consistent interest in a wide range of markets across the BRI, stretching from China through the Asia-Pacific into the Middle East, North Africa, as well as Eastern and Western Europe.

    Trade between countries that link the officially named ‘One Belt, One Road’ project, already exceeded USD3 trillion between 2014 and 2016, with China’s investment in these nations surpassing USD50 billion.3

    “In the decades ahead, the BRI will also be one of the key driving force behind China’s economy,” stated Wenjie Zhang, Executive Vice President and Co-head of Global Banking at HSBC China during the bank’s Belt and Road Conference in Beijing.

    Over the coming years the plan is to create an expanding network of railways, roads, ports and power grids, extending China’s economic footprint along six distinctive trade corridors. These will radiate out from the country’s borders, with the aim of embracing global trade.4, 5

    “The greatest opportunities are still in countries that are relatively less developed than China,” explained Wei Diao, Deputy Chief Financial Officer and General Manager of Finance Department at China National Aero-Technology International Engineering Corporation (AVIC).

    “China's experience has created an important opportunity for them. They will benefit from our experience and challenges we have overcome from 40 years of reforms and opening up. We are willing to share all this with our partners, so that they are able to take a better path.”

    Already BRI is extending beyond China’s immediate neighbours and into regions and countries not traditionally known for its economic links with Beijing.6,7 The Asian Infrastructure Investment Bank (AIIB), Silk Road Fund and the New Development Bank have also already committed roughly USD1.1 trillion to develop infrastructure under the banner of the BRI.8, 9

    “There’s a great alignment between what’s needed from an infrastructure perspective and how important that is for the countries throughout the world and the focus of BRI in terms of providing both capital and expertise to be able to meet that infrastructure requirement,” stated James Cameron, Co-head of Infrastructure and Real Estate Group for Asia Pacific at HSBC.

    Certainly, countries along the BRI have different levels of development. This presents a whole spectrum of opportunities and challenges in terms of the legal, cultural and political landscape. One of the biggest issues that needs addressing is the infrastructure gap.

    “Clearly it will benefit a lot of Chinese businesses that invest into these countries. It will also benefit local economies and local people who participate in projects along the Belt and Road. Overall, it is going to be a win-win situation for both sides,” stated Frank Fang, Executive Vice President and Head of Commercial Banking at HSBC China.

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