2015 Shipping Investment Review: China and One Belt One Road
2015 has seen significant investment into China’s One Belt, One Road infrastructure projects and cargo port improvements throughout Asia, Europe and Africa.
China has an ambitious plan to double the nation’s economic growth by 2020. To accomplish this, Chinese officials have introduced a One Belt, One Road plan, with the intention of developing a trade and infrastructure network that combines the economic and trade benefits of the Silk Road Economic Belt and the 21st Century Maritime Silk Road. The ambitious plan connects more than 60 countries and regions in Asia, Europe, and Africa.
The introduction of China’s One Belt, One Road initiative has seen significant investment in infrastructure projects and improvements in 2015. These exciting developments have many governments and shipping industry leaders seeking opportunities to invest with Chinese companies.
We’re very keen to try to partner with Chinese companies in those new infrastructure projects … [the Belt and Road is] the only big scheme we can see where political leaders are trying to do something to develop more demand.- Chairman of Maersk China and Chief Representative of Maersk Group North Asia
To secured itself a sea-lane to the Indian Ocean, China has invested millions of dollars in developing the Gwadar port facility and Free Trade Zone in Pakistan; on the Arabian Sea.
The Gwadar port’s strategic location connects China to the Arabian Sea and the Strait of Hormuz — a gateway for one third of the world’s traded oil. This approach can also be used to provide a steady supply of cargo and oil to China overland, through an expanded Karakoram Highway.
China has also developed a project to finance a shipping canal across the Isthmus of Kra in Thailand. When completed, it will provide an alternate link between the Indian and Pacific Oceans.
The total value of the investment is expected to be approximately $20 billion, and will shorten the sea passage to nearly 2400 kilometers.
The port of Colombo in Sri Lanka is much closer to the Indian mainland than competing transshipment ports in Singapore and Malaysia. Because of this advantage, China Merchants Holdings International (CMHI) has committed to a $500 million investment in the Colombo port, Sri Lanka’s first deep-water facility.
A sizable investment from the Asian Infrastructure Investment Bank (AIIB) and the Silk Road Fund, has lead to the development of the Special Economic Zone (SEZ) Khorgos-East Gate, located near the Kazakh-Chinese border.
Seen as an opportunity to further promote their Maritime Silk Road trade strategy, Chinese officials are encouraging more investment in joint railway and port projects with Lithuania; China’s largest trade partner in the Baltics.
As well, in early 2015, China Merchants Group announced it would invest $5 billion in the construction of a 30-square mile industrial park in Belarus (Eastern Europe); opening a route to the Baltic Sea for the land-locked country. Additionally, China Merchants Group has signed a letter of intent with Lithuania’s Port of Klaipeda — the biggest container port on the Baltic Sea, that many analysts see as a considerable investment from China.
As part of a plan to increase Beijing’s influence in Africa, Chinese investors have committed $60 billion to development projects, debt relief, and to boost agriculture on the struggling continent.
China is expected to make significant investment in Africa, including factories that will manufacture goods for export, as well as build roads, shipping ports, and railways.
All Part of The Plan
According to analysts, these strategic investments made in 2015 are consistent with China’s plan to raise political and commercial influence in neighboring countries, and sustain the steady growth of the Chinese economy.