Road to Greatness

By+Wang+Jun

The National Development and Reform Commission， the Ministry of Foreign Affairs and the Ministry of Commerce issued a long-expected document entitled Vision and Actions on Jointly Building the Silk Road Economic Belt and the 21st-Century Maritime Silk Road on March 28.

Experts estimate that in the next few years， more than 1 trillion yuan （$160 billion） of Chinese investments will be made in countries along the Belt and Road.

According to the document， countries along the Belt and Road have their own resource advantages， and their economies are mutually complementary. Therefore there is great potential and space for cooperation.

Industrial insiders say facilities connectivity， unimpeded trade and financial integration will bring tangible investment opportunities. At the 2015 Boao Forum for Asia held on March 26-29 in south Chinas Hainan Province， many industrial leaders said they have detected opportunities from the Belt and Road Initiative.

“We can search for new business opportunities by making best of the Belt and Road Initiative，” said Lai Xiaomin， Chairman of China Huarong Asset Management Co. Ltd. “We have businesses for asset management， banking， securities， futures and investment funds； and the Road and Belt Initiative as well as the establishment of the Asian Infrastructure Investment Bank have broadened our vision and will bring more opportunities.”

Hu Huaibang， Chairman of China Development Bank， vowed to strengthen cooperation within the industry.

“Now we can both grant bank loans to certain projects and offer credit to some banks. We will certainly continue to cooperate with various countries，” Hu said. “Now we have established a database covering 900 projects in 64 countries， involving an investment of $890 billion.”

The infrastructure industry has also seen significant opportunities.

“Our company has started market surveys or investment projects in over 60 countries along the Belt and Road，” Song Hailiang， Vice President of China Communications Construction Co. Ltd.， told Economic Information Daily.

According to Song， the company has invested in the Colombo Port City project in Sri Lanka， set up regional headquarters in the Netherlands， participated in highway and railway projects in Central Asian countries， purchased patents through overseas mergers and acquisitions， and established research and development centers in the Netherlands and Singapore.

The same confidence exists within the energy industry. Liu Shaobin， Chairman of Beijing Petroleum Exchange， said the Belt and Road Initiative needs industrial support， while the petroleum industry carries the highest importance.

“The Belt and Road Initiative is a good platform for both outbound investment by Chinese companies and inbound investment by foreign companies，” Liu said. “Last year we signed cooperation contracts with some companies from Arabian and ASEAN countries， and we have reached a consensus on cooperation patterns and product supplies. We have also set up an industrial fund to provide financial support to the cooperation.”

The Belt and Road Initiative will undoubtedly need a huge amount of investment as well as financial services.

According to an estimation by Zhou Jingtong， a senior researcher with Bank of China， from 2010-20， Asia alone will need $8 trillion of investments in infrastructure. However， countries along the Belt and Road are still not capable of financing this amount. In these countries， the average national savings rate is about 22 percent， lower than half of that in China.

Infrastructure is the most favored sector among investors. Guan Qingyou， executive head of Minsheng Securities Research Institute， said infrastructure connectivity is an important precondition for the Belt and Road Initiative， and it requires priority among all other tasks. The list of major railway， highway， waterway and port projects for 2015 will soon be released. An analysis of various Chinese provincial government work reports shows that in 2015， investments in infrastructure related to the Belt and Road Initiative will total 1.04 trillion yuan（$170 billion）， of which 68.8 percent will be made in railway， highway and airports.

“We predict that infrastructure projects connecting Southeast Asia will be started first， with the Gwadar Port of Pakistan， Hambantota Port of Sri Lanka and other ports along the Indian Ocean becoming the first few strategic ports along the Belt and Road，” said Guan. “Major Chinese infrastructure companies， including China Railway Engineering Corp.， China Railway Construction Corp. and China Communications Construction Co. Ltd.， can take the lead in accelerating infrastructure connectivity.”

Just as Zheng Yongnian， Director of East Asian Institute of National University of Singapore， told the Chinese online edition of Financial Times on March 23， Chinese capital and production capacity have become excessive as its economy grows， and going abroad becomes a must for China. According to him， it is Chinese investment， not the Chinese Government， that should go abroad， while the government should simply serve to facilitate the process.