Breaking News
Investing Pro 0

Unpacking China’s Belt And Road Initiative

By Qatar National BankMarket OverviewMay 12, 2019 03:03AM ET
Unpacking China’s Belt And Road Initiative
By Qatar National Bank   |  May 12, 2019 03:03AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items

A new economic order is emerging as China presses ahead with its Belt & Road Initiative (BRI). Nearly 40 world leaders and some 5,000 delegates gathered in Beijing for the second BRI Summit late last month.

First launched in 2013, the BRI is a Chinese-led global programme inspired by the old Silk Road and aimed at promoting connectivity, trade and capital flows between Asia, Africa and Europe. The “Belt” is comprised of overland projects connecting China to Europe via Central Asia and the Middle East, while the “Road” refers to projects associated with maritime routes linking China with Africa and the Middle East via Southeast Asia and South Asia. At the time of writing, China has signed BRI-related cooperation agreements with 126 countries and 29 international organizations. More than 60 countries are formal participants of the BRI, representing 2/3 of the world population and more than ¼ of global GDP. China’s president Xi Jinping often refers to the RBI as “the project of the century.”

The RBI is China’s most important global initiative. The massive infrastructure programme is expected to generate direct trade and investment opportunities for China, easing the transition from a capital intensive to a more consumption-based growth model. Our analysis delves into the trade and investment aspects of the BRI for China, illustrating the discussion with the introduction of a few key projects.

On the trade side, BRI offers an important avenue for China to increase its exports and imports from neighbors and other key partners. Both the “Belt” and the “Road” converge towards China’s mainland, shortening delivery times and improving Chinese access to different markets, including under-served frontier and emerging economies. This will likely produce trade growth by increasing trade volumes from and to China. Moreover, roads, railways, ports and other infrastructure-related projects often demand a large number of goods and services in which China is competitive, including construction and heavy manufacturing. This is ever more important for China as the country’s investment-driven growth has led to capital misallocation and excess capacity in those sectors. By creating additional demand for infrastructure, China will boost its exports in some of the sectors where it is most needed.

On the investment side, the BRI offers sizable opportunities for an efficient allocation of Chinese resources. The surplus of domestic savings is still substantial in China. Rebalancing towards consumption is occurring but not in a fast enough pace to materially reduce the savings glut. Policymakers could see outward investment into what is largely Chinese-led projects as an important avenue to direct those savings.

Belt And Road Initiative

Belt & Road Initiative
Belt & Road Initiative

(Corridors are approximately drawn)

Sources: China-Britain Business Council, QNB analysis

On the project side, there are several major enterprises either under construction or already in the pipeline. In Pakistan, China is leading the transformation of the southern port of Gwadar into an energy hub linking China to the Middle East. This involves road and pipeline networks stretching from Gwadar to western China, reducing a 12,000km journey to import hydrocarbons by sea to less than 3,000km over land. Work on the road network and port expansion have already begun. Other important BRI port projects include investments in Brunei, Sri Lanka, Greece, and Belgium. In Indonesia, the 142km Jakarta-Bandung high-speed railway is currently under construction and is set to become the first foreign line to use China’s high-speed railway standards, technologies and equipment. Other promising flagship BRI railway projects include the Nigerian Abuja-Kaduna railway and bilateral railways between China-Laos and Ethiopia-Djibouti.

The first BRI summit was held in Beijing in May 2017, when the global infrastructure programme was boosted by additional investments and new members. During the second BRI summit, China wanted to further strengthen the environmental and financial sustainability of BRI projects. In our view, Chinese authorities seem to be interested in mitigating potential project risks by increasing transparency, stakeholder engagement, compliance and environmental long-term sustainability. This will likely be supported by newly founded official financial institutions, including the Asian Infrastructure Investment Bank (AIIB), the Silk Road Fund and the New Development Bank (NDB).

All in all, the BRI is set to provide a “big push” for infrastructure investments in frontier and emerging markets. As China recalibrates the BRI with enhanced project governance, even advanced economies and G-7 countries such as Italy, Germany, Belgium and Greece become more engaged. This is particularly good for Beijing in a period in which economic disputes with the US are still creating jitters.

Unpacking China’s Belt And Road Initiative

Related Articles

Unpacking China’s Belt And Road Initiative

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.
  • Any comment you publish, together with your profile, will be public on and may be indexed and available through third party search engines, such as Google.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
Sign up with Email