Western partners wanted on China’s Silk Road

Beijing uses press conference to sell multinationals on ambitious trade plan

PUBLISHED : Monday, 08 May, 2017, 11:42pm
UPDATED : Monday, 08 May, 2017, 11:42pm

Beijing is seeking to lure more multinational companies and agencies to participate in its “Belt and Road Initiative”, in an attempt to reduce risks borne by its state companies.

Xiao Yaqing, head of the State-Owned Assets Supervision and Administration Commission, told a press conference on Monday that China’s building of a new Silk Road would be “open and inclusive”, and try to minimise risks by collaborating with the world’s leading companies and international organisations.

Officials from six of the nation’s biggest state-owned enterprises sat alongside Xiao during the event, highlighting their work with overseas companies – including ones from the United States – on the massive infrastructure projects involved in the belt and road scheme.

China has invested more than US$50 billion in belt and road partner countries since President Xi Jinping introduced the initiative in 2013, according to Xinhua.

The press conference came ahead of a two-day summit Beijing will host from this Sunday with belt and road partners.

Ren Hongbin, chairman of China National Machinery Industry, said at the event that some of the company projects were launched in collaboration with private firms from the US. The US is not a participating nation in the belt and road plan, and its government has criticised the initiative for lacking transparency.

Ren's company is cooperating with General Electric on a wind-power project in Kenya, which received US government funding under its Power Africa plan.

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“We can connect the one belt, one road initiative with projects of European nations and the US, instead of seeing it from a zero sum mindset,” he said.

The belt and road plan could funnel investments totalling up to US$500 billion into some 60 countries over the next five years, analysts with Credit Suisse wrote in a report.

But critics said many projects in the initiative did not make ­commercial sense, and that multinationals would not be ­interested.

“Only state-owned enterprises dare to ignore the huge uncertainties and geopolitical risks involved in the investments, and take the chance to show their ­loyalty to the top leadership,” Yi Xianrong, an economist at Qingdao University, said.

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“Private companies and international organisations will stay out if they have no profit to make from the projects.”

Lu Zhengwei, an economist with Industrial Bank in Shanghai, said multinationals would not be interested in most belt and road projects until infrastructure ­construction was completed.

“They will be cautious and large-scale investment will only be possible after the local economy takes off, which will take a long time,” Lu said.

One solution would be to seek cooperation with local companies in the destinations, pooling risks with them and financing locally, he said.

Liu Qitao, the chairman of China Communications Construction Group, spoke at Monday’s press conference about the hardship of building a road from Xinjiang to Pakistan’s ­Gwadar Port.

“It was very difficult. We’ve spent decades and 88 Chinese workers have died from natural disasters,” Liu said.