Belt and Road Initiative overview
Deloitte with B&R
The Belt and Road Initiative (BRI) is a political and economic policy first proposed by President Xi Jin Ping in 2013. While the "Belt" refers to an overland route across China through Central Asia to Eastern Europe, the "Road" is a network of maritime pathways linking sea ports in China, Southeast Asia, Africa and the Middle East. This is a revolutionary initiatives with 69 participant countries, which account for over 62% of the global population, 31% of the global GDP, and 33% of global trade volume.
Opportunities for enterprises in China and participant countries include large-scale infrastructural development, industrial facilities construction, cross-border investments, monetary policy and bilateral relations coordination, as well as cultural interaction. However, there are challenges to overcome, such as the urge to build trust among the participant countries, the yet to be improved sovereign credit rating of some BRI countries, and investors' concerns over the political situation of BRI countries and economic feasibility of BRI projects.
Fact 1: There are 53 official languages within the Belt and Road country network
English may be the global language of business, but for the 65 countries within the Belt and Road network, you will hear over 50 official languages being spoken, among which include more common ones such as Indian, Russian and Malay, as well as quirkier-sounding ones such as Uzbek, Montenegrin and Tajiki. This shows that regional trade holds significant weight in the Belt and Road Initiative.
Did you know? While Russian is a popular language in Central Asian countries (as most of them are former Soviet states), investors have expressed concern over the difficulty of finding competent Russian translators.
Fact 2: There are 6 corridors in the Belt and Road network
Ironically, the 'Road' in 'Belt and Road' doesn't refer to an overland pathway, but instead, to a maritime silk route that runs from the Eastern Chinese Coast through Singapore to the Mediterranean Sea. The 'Belt', on the other hand, is made up of 6 economic corridors in total, all of which connect the Northern, Southern and Western parts of China to other Belt and Road regions.
For Northern China, there's the China-Mongolia-Russian Corridor that runs from Tianjin to Ulan-Ude in Siberia. For Southern China, you've got the China-Indochina Peninsula Corridor that runs from the Pearl River Delta to Singapore, as well as the Bangladesh-China-Myanmar Corridor that runs from Kunming to Kolkata. For Western China, there are three, which include the China-Pakistan Corridor that runs from Kashgar to Gwadar, the China-Central Asia-West Asia Corridor that links through 5 Central Asian countries and 17 West Asian countries, as well as the New Eurasian Land Bridge that starts in Jiangsu province, China, and ends in Antwerp, Brussels.
These transcontinental links form the foundational infrastructure of the Belt and Road Initiative, which will facilitate the transportation of resources, the flow of people, as well as the exchange of capital and culture among 60 plus countries.
Fact 3: Silk Road Fund and AIIB as key sources of BRI funding
As one of the most ambitious diplomatic and economic initiatives launched in the 21st century, the Belt and Road Initiative is not only geographically vast, but also economically well-backed. In 2014, the Chinese government set up the Silk Road Fund with USD40 billion, which is intended to go towards infrastructural investment, resource allocation, as well as industrial and financial cooperation.
One year later, the Asian Infrastructure Investment Bank (AIIB) was established with the aim of boosting infrastructural development in the Asia-Pacific region by financing Belt and Road projects. With capital as formidable as this, there appears to be no shortage of funding for the Belt and Road Initiative.
Fact 4: The number of contracts signed by Chinese enterprises in BRI countries have exceeded 1800
Since the launch of the Belt and Road Initiative, a substantial amount of its investment has gone to ASEAN regions, such as Singapore, Laos, Indonesia, Malaysia, with Pakistan and Russia getting key shares in the pie as well.
To date, Chinese enterprises have already signed over 1800 contracts in 61 Belt and Road countries, with the value of these newly-signed contracts amounting to about USD32 billion. This comprises more than half of China's total contract value in the first quarter of FY17, which should be a hefty testament to China's commitment to realizing the potential of Belt and Road projects.