4 Jul 2016

China-Britain Belt and Road Case Studies Report 2016

China-Britain Business Council

The Belt and Road initiative was launched by President Xi Jinping in 2013, with the aim of improving and creating new trading routes, links and business opportunities between China and the rest of the world. Consisting of two main elements, the Belt and Road routes cover over 60 countries across Asia, Europe, the Middle East and Africa.

The ‘Belt’ refers to The Silk Road Economic Belt, which aims to enhance and develop land routes by:

• Building a “Eurasian land bridge” – a logistics chain from China’s east coast all the way to Rotterdam/ Western Europe; and

• Developing a number of economic corridors connecting China with Mongolia and Russia, central Asia and South-East Asia.

The ‘Road’ refers to the 21st Century Maritime Silk Road - a sea route rather than a road (a reference to the old maritime Silk Road) which runs west from China’s east coast to Europe through the South China Sea and the Indian Ocean. The six economic corridors of the Belt and Road are shown on page 16.

The main aims of the Belt and Road initiative include:

• Developing prosperity for underdeveloped parts of China, particularly in the west of the country.

• Developing new opportunities for China to partner and co-operate with various countries along the Belt and Road routes, many of which are developing countries.

• Increased integration, connectivity and economic development along these routes.

It is estimated that the Belt and Road countries account for two-thirds of the world’s population, but only account for one third of the world’s GDP. Infrastructure is key to the economic development of countries along these routes.

Chinese enterprises, already experienced in building China’s modern and ever expanding network of roads, railways, airports and power generation facilities, and supported in their efforts by new financial institutions such as the Silk Road Fund and Asia Infrastructure Investment Bank, stand ready to take advantage of these opportunities.

Entering into unfamiliar, challenging and often risky business and geographical environments is a scenario which plays well to the expertise of UK firms. As this case study report demonstrates, powerful partnerships between British and Chinese companies, playing to their unique strengths, are already shining, tangible examples of cooperation along the Belt and Road.

In this report, you will be able to review 21 case studies, which together demonstrate the farsightedness of Chinese and UK firms, as well as the benefits of working together. HSBC, along with two Chinese banks, has provided debt facilities for a power plant in Bangladesh with the design, consultancy, engineering and construction expertise supplied by major Chinese enterprises; while oil and gas firm BP is providing services and expertise to its long-term partners CNPC and CNOOC on projects in Iraq and Indonesia respectively. UK firm Linklaters has provided legal services to Chinese banks involved in financing a coal mine and associated power station in Pakistan; and KPMG is providing advisory services to a Chinese bank looking to finance projects in Nigeria. Such projects are underlined with pioneering agreements, such as that signed between London Metal Exchange and a number of Chinese institutions in order to establish financial and physical links along the Belt and Road. Finally, Chinese enterprises are also leveraging technologies, know-how and talent accumulated here in the UK to address market opportunities in third countries. The UK connection, as springboard to international business, is providing a win-win for both China and the UK.

As is evident in this report, from Asia to the Middle East, from Africa to Eastern Europe, and in countries across the Belt and Road, UK firms are already cooperating with Chinese firms and helping to turn the Belt and Road vision into reality. By highlighting these cases, it is our intention at CBBC to encourage many more Chinese and UK businesses to follow in their footsteps.

Please click here for the full report.