171023 Belt and Road - Cass Business School · Knut Mathiassen Managing Partner Email: km@ncape.com...

China’sBeltandRoadPolicy

Athens,November2017– KnutMathiassen

TheBeltandRoadMap

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MapII

25October2017 3

Somefactsandfigures

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Ø Unveiledin2013asaUSD900Bill.ProjecttopromoteTradeandInvestments– anew“SilkRoad”totheWestandSouth,includinga“MaritimeSilkRoad”

Ø Chineseinvestmentsin“Beltand“roadcountrieshasacceleratedin2016($31bill)and2017($33billtodate).2017examples:

v $11.6billforGlobalLogisticsPropertiesv $1.8billforAbuDhabioilfieldv $1.0billforCWTv $3.3billfinanceforIrantrainandhighwaydevelopments

Ø However,Chinahastightenedcontrolonoutboundinvestments[toensurecompliancewithBeltandRoadpolicy],restrictingmanyprivatecompanies.

Ø FundingbyChinese“policy”banks

Shouldwebeworriedaboutthe“Belt”?• Chineseeconomicandforeignpolicyendorsedathighestlevelandfacilitatet throughstateownedcompanies,largeprivatesectorconglomerates,ECA’sandpolicybanks

• Massiveinvestmentsinemergingmarkets(Moneytalks)

• Chineseeconomic“colonialism”?§ AlreadyaprovenmodelinAFRICA(e.g.Angola:OilforChinesegoodsandservices)

§ Exploitationofpoorcountrieswithrawmaterials?§ IncreasingdebtburdenofsmalleconomiesanddependenceonChinesegoodsandservices

• KeydriverissecuringaccesstoENERGYandRAWMATERIALSratherthanpromotingTrade?

• IRANstrategicHUBandsourceofOILimports(circumventionofSanctions).Barterarrangments andpaymentinRMB.

• Infrastructureinvestmentsandfinanceinreturnforfavourable longtermtradetreaties,lowertariffsforChinesegoods

• PromotionofRenminbe (Chineseyuan)attheexpenseofUSDcurrency

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IsBeltandRoadgoodforShipping?

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• InprincipleYESasInvestmentsinIndustry,Infrastructure,PortsandRoad/RailwaywillincreaseindustrialproductionandSeaborn trade.RecoveryforDryBulk??

• BUT(lookatthemap)– OverlandexpansionWESTdominates(Railroads,Pipelines,Roads).TruckingratherthanShipping?

• MARITIMESILKROAD:PortacquisitionsandterminalinvestmentsbenefitsCONTAINERSHIPPING,

• PortofPIREAUS:COSCOexperiencingsignificantchallenges,controversialinvestment.EuropeanresistancetoBeltandRoad?

• OverlandOILPIPELINES:MyanmartoChinacrudeoilPipeline400,000bpdstartedupinApril17;MaDaytoYunnanRefinery.willreduceton-milesforTankersEast

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