China's new international development program, the Belt and Road initiative, could mean opportunities for Nordic companies, especially those with experience in infrastructure and construction. However, to be successful it is important to understand the financial and political risks associated with large-scale development projects in Asia.
The Belt and Road initiative (B&R), originally proposed by Chinese President Xi Jinping in 2013, is an international development initiative composed of the Silk Road Economic Belt and the 21st Century Maritime Silk Road.1 B&R seeks to upgrade and develop railways, roads, energy pipelines, communication links, ports, waterways, bridges and other infrastructure in order to promote trade, travel, and communication between China and its partners.
The B&R initiative hit the mainstream news in mid-May when Chinese president Xi Jinping hosted a two-day event in Beijing, attended by 29 heads of state. The many voices of support in the audience included British chancellor, Philip Hammond, who was quoted in The Guardian as saying: “I commend President Xi ... for setting in train such a bold and visionary project. This initiative is truly ground-breaking … with the potential to raise the living standards of 70% of the global population.” Noticeably, however, only one G7 leader, the Italian prime minister Paolo Gentiloni, attended the showcase. This low attendance could reflect international concerns that the B&R initiative will mean a boon for Chinese companies at the expense of non-Chinese competitors and that it will allow Beijing to boost its geopolitical power regionally and further afield.
President Xi’s proposal is incredibly ambitious. As described, it would connect China to over 60 different countries throughout Asia, the Middle East, Europe and Africa, mimicking the far-reaching success of the historical Silk Road. China itself has said it will invest 4 trillion USD into B&R projects, and some experts have predicted a cumulative investment of up to $8 trillion.
1The Silk Road Economic Belt comprises initiatives to connect Asia, the Middle East, and Europe via infrastructure development, increased trade and cultural exchange. The 21st Century Maritime Silk Road is a complementary proposal connecting Southeast Asia, Oceania and North Africa via the Pacific and Indian Oceans. Together, they are known as the Belt and Road inititative, the Belt and Road (abbreviated B&R), or One Belt, One Road (abbreviated OBOR).
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