DOHA: A new economic order is emerging as China presses ahead with its ambitious Belt & Road Initiative (BRI), the Qatar National Bank said in its latest economic commentary. The BRI will provide a “big push” for infrastructure investments in frontier and emerging markets, the report said.
First launched in 2013, the BRI is a Chinese-led global programme inspired by the old Silk Road and aimed at promoting connectivity, trade and capital flow between Asia, Africa and Europe. Nearly 40 world leaders and some 5,000 delegates had gathered in Beijing for the second BRI summit late last month.
Both the “Belt” and the “Road” converge towards China’s mainland, shortening delivery times and improving Chinese access to different markets, including under-served frontier and emerging economies.
“This will likely produce trade growth by increasing trade volumes from and to China. Moreover, roads, railways, ports and other infrastructure-related projects often demand a large number of goods and services in which China is competitive, including construction and heavy manufacturing,” the report said.
“Our analysis delves into the trade and investment aspects of the BRI for China, illustrating the discussion with the introduction of a few key projects,” the report said.
The “Belt” is comprised of overland projects connecting China to Europe via Central Asia and the Middle East, while the “Road” refers to projects associated with maritime routes linking China with Africa and the Middle East via Southeast Asia and South Asia.
China has signed BRI-related cooperation agreements with 126 countries and 29 international organisations. More than 60 countries are formal participants of the BRI, representing two-thirds of the world population and more than one-fourth of global GDP. China’s president Xi Jinping often refers to the RBI as “the project of the century.”
The BRI is China’s most important global initiative. The massive infrastructure programme is expected to generate direct trade and investment opportunities for China, easing the transition from a capital intensive to a more consumption-based growth model.
On the trade side, it added, the BRI offers an important avenue for China to increase its exports and imports from neighbours and other key partners. This is ever more important for China as the country’s investment-driven growth has led to capital misallocation and excess capacity in those sectors, it said.
“By creating additional demand for infrastructure, China will boost its exports in some of the sectors where it is most needed.”
On the investment side, the report said the BRI offers sizable opportunities for an efficient allocation of Chinese resources.
On the project side, the report said there were several major enterprises either under construction or already in the pipeline. “In Pakistan, China is leading the transformation of the southern port of Gwadar into an energy hub linking China to the Middle East,” it said.
This involves road and pipeline networks stretching from Gwadar to western China, reducing a 12,000km journey to import hydrocarbons by sea to less than 3,000km over land.
Work on the road network and port expansion have already begun, it said, adding that other important BRI port projects include investments in Brunei, Sri Lanka, Greece and Belgium.
In Indonesia, it said the 142km Jakarta-Bandung high-speed railway is currently under construction and is set to become the first foreign line to use China’s high-speed railway standards, technologies and equipment.
“Other promising flagship BRI railway projects include the Nigerian Abuja-Kaduna railway and bilateral railways between China-Laos and Ethiopia-Djibouti.”