Enigma behind US$50b canal project says he is not an agent for China

Wang Jing, the architect of a US$50b scheme to build a transoceanic waterway, shrugs off suggestions he is an agent of the state government

PUBLISHED : Tuesday, 06 May, 2014, 12:42am
UPDATED : Tuesday, 06 May, 2014, 12:42am

Wang Jing, the enigmatic businessman behind Nicaragua's US$50 billion Interoceanic Grand Canal, shrugs off scepticism about how a little-known Chinese entrepreneur can be driving a huge transcontinental project, insisting he is not an agent of the central government.

"I know you don't believe me," said Wang, adding that he has spent about US$100 million for canal preparation work and is burning through as much as US$10 million a month on the project. "You believe there are people from the Chinese government in the background providing support. Why, in the end, is only Wang Jing out front?"

Officials including President Xi Jinping, Premier Li Keqiang and former leaders Jiang Zemin and Wen Jiabao have all visited Beijing Xinwei Telecom Technology, the state-connected wireless communication technologies company that Wang took control of four years ago.

Wang, 41, grabbed global headlines in June last year when he sealed a controversial no-bid 50-year renewable concession from Nicaragua's government to develop a canal to rival Panama's, and related facilities.

Big Chinese companies just don’t parachute down into Latin America

The proposed scope is enormous, comprising construction of a waterway that may extend 210 kilometres, depending on the route selected, along with two ports, a railway, oil pipeline, and an international airport.

The canal would be longer, deeper and wider than the Panama Canal, about 800 kilometres to the southeast.

The scale of the project has led some to suggest it could only be viable with the backing of the Chinese government, which might see it as a geopolitical play to balance US influence in Central America.

"I can't imagine [Wang] would have gone forward without at least co-ordinating with the Chinese government," said Evan Ellis, an assistant professor for hemispheric defence studies at the National Defence University in Washington. "Big Chinese companies just don't parachute down into Latin America."

Ellis said the project might provide Beijing with commercial leverage over key Latin American governments and local companies, which might prove crucial to guaranteeing trade routes and access to raw materials.

For Wang, who can make a small fortune from licensing arrangements alone, the project represents a perilous high-wire act. The waterway, which would connect the Atlantic and Pacific oceans, has been criticised as a potential white elephant, while Wang has been ridiculed in the global press for lacking experience developing or financing big infrastructure.

Wang established Hong Kong Nicaragua Canal Development Investment (HKND) in August 2012 and opened offices in Hong Kong's premier International Financial Centre just weeks before June's announcement.

Nicaraguan opposition politicians also question Wang's commitment to addressing social and environmental issues, particularly how the proposed project may affect Lake Nicaragua, an important freshwater source in the region.

Wang has brought in international specialists to help quell concerns. McKinsey & Co was hired to conduct an economic feasibility study, while Environmental Resources Management is conducting an environmental and social impact study for the routes under consideration.

Wang, who may be prepared to spend as much as US$300 million of his own cash, said he would use a combination of cross-shareholding, bank lending and debt issuance to raise the estimated US$50 billion needed to finance the project.

Five international groups had agreed to invest in the project, he added. "We have not only signed memorandum of understanding, we are working on final preparations for executable, irrevocable contracts," he said.

On April 23, Xugong Group Construction Machinery, one of China's biggest construction equipment manufacturers, announced it had reached a framework agreement to take a 1.5 to 3 per cent stake in Wang's development company.

No dollar amount was attached to the investment, which also would make Xugong the sole supplier of engineering equipment to the canal project. More announcements were expected in the coming weeks, Wang said.

Other companies that may participate in an international consortium include state conglomerate China Railway Construction Corp, China's biggest overseas engineering contractor, which is one of Wang's strategic partners that has been brought in to help with feasibility studies. Wang said he had spoken to Chinese state-owned banks but would not say whether any would provide financing.

"I want to point out that it isn't going to take US$50 billion in cash to do this," Wang said.

On paper, Wang looks flush with cash. His main asset is a 36.97 per cent stake in Beijing Xinwei, the state-backed developer of the mainland's wireless communications standard that now specialises in mobile network development and products. Beijing Xinwei in March estimated its assets at 26.89 billion yuan (HK$33.8 billion).

Less is known about Wang's path to success. The youthful chief executive refused to discuss his family background, saying only that his father was an ordinary office worker and died in 2010 following an 11-year illness; his mother, who is about 70 years old, is retired; and that he has a daughter.

"It's that simple," he said. "I'm very ordinary."