When the Belt and Road (B&R) initiative was first announced by President Xi of China in late 2013, few could have envisaged the grandeur and ambition that it would entail.
It has since generated considerable discussion and speculation about its specifics, such as what constitutes a B&R project, if there are commercial opportunities present and what the chances of success are.
Kept broad and inclusive by the Chinese government, the B&R strategy has transcended many of its initial impressions and has proven to be much more.
For example, there is a focus on developing bankable infrastructure projects supported by large international agencies, which infers that the B&R goes beyond just geopolitics and embraces the promotion of commercial interests, trade, culture and integration.
More than just a road
Even though the B&R’s initial objective was to rebuild the ancient land network that connects China to Europe via Central Asia, it has subsequently gone beyond that to include building highways, railways, ports, airports and now even establishing a maritime route that cuts through from China to South-East Asia, South Asia, the Middle East, and eastern Africa.
These activities are mainly focused along six economic corridors, which cuts across over 65 developing countries and is expected to be a catalyst for infrastructure development that will have an impact on a population of about 4.4 billion and one third of the global economy.
The Belt and Road also encompasses the development of an infrastructure ecosystem ranging from power generation and utilities infrastructure, oil and gas pipelines, to telecommunications transmission cables in a massive global connectivity plan.
Even as its current focus is on outbound infrastructure development and trade enhancement, there are expected further activities in subsequent phases, which embrace social infrastructure such as education and healthcare, media, software and innovation as well as more focus on cultural and people-to-people exchanges, some of which are already underway. B&R also focuses on industrial and resource cooperation to drive trade and with this in mind, 70 cooperative zones have already been established.
The objectives of the B&R initiative includes other strategic goals such as establishing global recognition in developing complex transnational infrastructure projects. The B&R is also clearly an important part of China’s ongoing national reform agenda, building on the “Go Out” policy launched in the 1990’s, and complements the current 13th Five-Year plan and the Made in China 2025 strategy. These outbound investments also further support the internationalization of China’s renminbi currency, which helps diversify currency risks.
Since its announcement in 2013, there have been a number of key milestone achievements, including the first China-UK transnational freight train, which completed its 12,450km journey (through seven other countries in just 18 days) earlier in January this year. Also, the Jakarta-Bandung high speed rail project, for which the construction contract was signed in April 2017, is another flagship B&R project which fully adopts Chinese railway technological standards.
The need for Sino-foreign partnerships
The B&R initiative is such a massive undertaking that even China with all its resources, people and financing has sought partnerships with foreign companies. These partnerships can prove to be beneficial for China and foreign companies in many ways.
Gaining knowledge through foreign partnerships can help Chinese enterprises further develop expertise, and enable them to enhance global credibility in the infrastructure sector. For foreign companies, a collaboration with Chinese companies in infrastructure projects in third party countries can help open up access to its large domestic market. Furthermore, foreign companies can partake as a private investor in projects that are risk-guaranteed by Chinese institutions, with an improved risk-return ratio.
Successful partnership examples already exist, wherein foreign multinationals have become established equipment suppliers to Chinese engineering, procurement and construction (EPC) companies and have thereby benefited from a boost in orders both in third party markets as well as in China.
RCEP and China: Reimagining the future of trade in Asia
The Regional Comprehensive Economic Partnership (RCEP) could eventually usher in an era of much deeper regional integration: for corporates doing business in the region, their future success may well hinge on how adeptly they manage to navigate the evolution of Asia’s trade landscape under the RCEP.
Last month, 15 countries in the Asia-Pacific region – including the 10 member states of the Association of Southeast Asian Nations (ASEAN) as well as China, Australia, Japan, New Zealand, and South Korea – signed the landmark Regional Comprehensive Economic Partnership (RCEP) on the final day of the 37th ASEAN Summit.(more…)
Thailand ready to ink big Chinese-backed trade deal
The RCEP will cover all 10 Asean member states plus five partners: China, Australia, Japan, New Zealand, and South Korea and will take effect from the middle of 2021 if at least six Asean members and three partners agree to its terms.
Great Wall Motor (China) takes over GM factory in Thailand
The Thai production hub will become operational in the first quarter of 2021 with automobile production capacity of 80,000 units per annum.
Covid-19: the Latest on Southeast Asia
As 2021 dawns, the coronavirus pandemic continues to develop in Southeast Asia. Many countries are preparing to receive their first...
Thailand’s slow economic recovery
The speed of economic recovery in Thailand has been slower than neighbouring countries such as Malaysia, Vietnam and China, especially...
Thailand strengthens COVID-19 control measures
Apart from the capital city, many provinces have also enforced tougher measures to contain COVID-19, with inter-provincial travels now being...
Thai Exports to grow 4% in 2021
Contributing factors include the recovering world economy and the International Monetary Fund’s (IMF) estimate that the world economy will expand...
Thai Government imposes ban on gatherings over New Year 2021 holidays
TAT would like to remind all that New Year 2021 activities have been cancelled or gone virtual nationwide to avoid...
Thai cabinet allows illegal migrant workers to sign up for 2-year work permit
Migrant workers from Cambodia, Laos, and Myanmar, who are in Thailand illegally, will be able to obtain a 2-year work...