Occupier-Edge_Ed5_A4 - AR

Buckle up for the Belt and Road (B&R) Initiative WHAT IMPACT WILL THE B&R INITIATIVE HAVE ON CHINESE CORPORATIONS GOING ABROAD AND OVERSEAS CORPORATIONS WANTING TO DO BUSINESS WITH CHINA?

WHAT OCCUPIERS WANT

SHAUN BRODIE Senior Director, Head of Occupier Research, Greater China shaun.fv.brodie@cushwake.com

The $8 trillion question: “What is the Belt and Road initiative?”

It’s a confusing name, but it could turn out to be the largest infrastructure project with close to one trillion dollars being invested across the globe. The much-talked-about Belt and Road (B&R) initiative is a massive infrastructure and economic development plan put forward by President Xi Jinping. At an estimated investment cost of up to U.S. $8 trillion, the initiative centres on connectivity and cooperation between China and Eurasian countries via the overland “Silk Road Economic Belt” (SREB) and the oceangoing “Maritime Silk Road” (MSR). The B&R could become either a source of great- power competition or a force for stability.

Since its announcement in 2013, the B&R initiative has garnered a huge amount of interest in China and across the globe. Countless governments, Chinese corporations, and overseas- based corporations have all expressed a willingness to get involved in this massive infrastructure plan, which will be built to ease connectedness and better facilitate global trade. When pieced together, the B&R initiative will be one of the largest trade collaboration schemes the world has seen for many years. No corporation, be they China or overseas based, can afford to ignore this mammoth step change for future global investment and trade. B&R has been offered as an innovative mode of cooperation in global governance against the backdrop of a worsening economic situation and simmering geopolitical problems worldwide. The strategy underscores China’s drive to take a larger role

in global affairs and its wish to synchronise economic activity with other countries. Chinese corporations now comprise a larger part of the commercial universe. The composition of the Fortune Global 500 list exemplifies this change in corporate geography. In fact, the number of Chinese firms on the list climbed from 43 in 2010 to 103 in 2016, making China’s representation second only to that of the United States. Among the world’s billion-dollar firms, around 900 are from the Greater China region. Having grown to a considerable size at home, many Chinese corporates, be they state-owned enterprises (SOEs) or privately-owned enterprises (POEs), are expected to use the B&R initiative as a strategic platform to further expand their commercial presence and activity globally in the form of either organic growth or via mergers and acquisitions. But, what does the future hold?

48 The Occupier Edge