Page 92 - 2018 White Paper on the Business Environment in China
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8 White Paper on the Business Environment in China
has the potential to massively overshadow the U.S.’ post- The Belt and Road label has embraced projects as
war Marshall reconstruction plan, involving about 65 far away from China as New Zealand, Britain and even
percent of the world’s population, one third of its GDP the Arctic. As of the end of October 2017, 69 countries
and helping to move about a quarter of all its goods including China have signed on to participate in the
and services. The Belt and Road Initiative has two main project. There has also been a wave of fundraising and
prongs: one is called the “Silk Road Economic Belt” and institution building. China’s sovereign wealth fund
the other the “21st Century Maritime Silk Road” (Phillips). announced a $40 billion Silk Road Fund in 2014. With
other countries it launched the Asian Infrastructure
Honeywell International is selling equipment to Investment Bank (AIIB) in 2015, and has $100 billion of
Central Asia for processing natural gas. Some non- initial capital that it plans on spending on the project in
Chinese companies are also tweaking their businesses different countries. “It’s doing what the Chinese do best,
to win more orders related to Beijing’s plan, and G.E. has state-backed infrastructure projects,” says Jane Golley
rearranged its marketing staff for global power equipment of the Australian National University. “The driver is now
to give them priority. China’s spending, however, doesn’t going to be return on investment,” said David Kelly,
necessarily mean immediate profit. Most of the money Head of Research at China Policy, a Beijing consultancy.
has yet to be earmarked, much less spent. For businesses, Thus, Chinese banks have wrested some power over the
the plan offers uncertainty as well as promise. Others are projects away from other SOEs. Beijing, which stresses
waiting to see whether China’s ambitious idea translates that Belt and Road is “open” to companies from across
into actual investment, and if American and European the world, is also “downplaying the Chinese presence” in
companies will have a place at the table. Some American many projects. That could hand opportunities to Western
companies are taking steps to improve their chances, but companies. “We believe there will be real opportunities
that sometimes means manufacturing more in China. for British companies to work with Chinese partners in
Honeywell said in a statement that it had also been third countries,” the China-Britain Business Council said.
looking for ways to produce more goods in China for the Siemens has won a $1 billion order from a Chinese SOE for
program. Others are waiting and watching because they a power plant in Saudi Arabia, and General Electric (GE)
know Chinese players look to be big winners from the says it is targeting billions from Belt and Road (Hancock).
outset (Bradsher).
Chinese firms may supply infrastructure projects
Former British Prime Minister Gordon Brown claims predominantly. “Given Beijing’s ability to finance projects
the economic crisis of 2008 had a profound change in and its leverage over recipients of these loans, Chinese
the world economy. Before 2008, the majority of trade, made high-end industrial goods such as high-speed rail,
manufacturing, and investment were in Western nations, power generation equipment, and telecommunications
America and Europe. Brown said that had started to equipment are likely to be used widely,” according to a
change because of China. Now, the majority of trade, report from the Lowy Institute for International Policy.
manufacturing and production are in the emerging parts Still, “there are opportunities for non-Chinese firms as
of the world, a fundamental seismic change. That is why well,” according to one major global bank, which cited
the Silk Road project is so important, “it is a big idea, and potential contracts for multinational manufacturers of
I think we sometimes in the West don’t understand how heavy-duty machinery as an example. “Steel produced
big an idea it is.” The Former British Prime Minister highly in China will be used along the road, and that of course
said now this is a time of the re-emergence of China as an is good for demand for our commodities,” said one
important global economic power, “No other country in Australian mining executive who currently exports to
the world has ever enjoyed 30 years of consistently high China. Even small- and medium-sized enterprises (SMEs)
economic growth in the way that China has. I don’t think could benefit as international trade corridors expand
anyone should underestimate the economic and social digitally, as well as physically. Many of the Belt and
achievements of China over these years,” Brown said, “I Road’s import-export trade prospects are long-term, and
don’t think we should underestimate the importance of significant hurdles remain to the cleared. Yet there is also
the Silk Road.” Brown said what was needed was an inter- much room for improvement in the international trade
connected world, adding the Silk Road project was the routes in place today, with many countries along the old
embodiment of an inter-connected world. He believed Silk Road ranking in the bottom third of the World Bank’s
the world needs reformed global institutions, from an 2016 Logistics Performance Index. The potential benefits
updated World Bank and IMF to an expanded G20, to of China’s Belt and Road Initiative for businesses and
cope with the rise of China and Asia (Song, West). import-export trade are beginning to emerge, including
92
has the potential to massively overshadow the U.S.’ post- The Belt and Road label has embraced projects as
war Marshall reconstruction plan, involving about 65 far away from China as New Zealand, Britain and even
percent of the world’s population, one third of its GDP the Arctic. As of the end of October 2017, 69 countries
and helping to move about a quarter of all its goods including China have signed on to participate in the
and services. The Belt and Road Initiative has two main project. There has also been a wave of fundraising and
prongs: one is called the “Silk Road Economic Belt” and institution building. China’s sovereign wealth fund
the other the “21st Century Maritime Silk Road” (Phillips). announced a $40 billion Silk Road Fund in 2014. With
other countries it launched the Asian Infrastructure
Honeywell International is selling equipment to Investment Bank (AIIB) in 2015, and has $100 billion of
Central Asia for processing natural gas. Some non- initial capital that it plans on spending on the project in
Chinese companies are also tweaking their businesses different countries. “It’s doing what the Chinese do best,
to win more orders related to Beijing’s plan, and G.E. has state-backed infrastructure projects,” says Jane Golley
rearranged its marketing staff for global power equipment of the Australian National University. “The driver is now
to give them priority. China’s spending, however, doesn’t going to be return on investment,” said David Kelly,
necessarily mean immediate profit. Most of the money Head of Research at China Policy, a Beijing consultancy.
has yet to be earmarked, much less spent. For businesses, Thus, Chinese banks have wrested some power over the
the plan offers uncertainty as well as promise. Others are projects away from other SOEs. Beijing, which stresses
waiting to see whether China’s ambitious idea translates that Belt and Road is “open” to companies from across
into actual investment, and if American and European the world, is also “downplaying the Chinese presence” in
companies will have a place at the table. Some American many projects. That could hand opportunities to Western
companies are taking steps to improve their chances, but companies. “We believe there will be real opportunities
that sometimes means manufacturing more in China. for British companies to work with Chinese partners in
Honeywell said in a statement that it had also been third countries,” the China-Britain Business Council said.
looking for ways to produce more goods in China for the Siemens has won a $1 billion order from a Chinese SOE for
program. Others are waiting and watching because they a power plant in Saudi Arabia, and General Electric (GE)
know Chinese players look to be big winners from the says it is targeting billions from Belt and Road (Hancock).
outset (Bradsher).
Chinese firms may supply infrastructure projects
Former British Prime Minister Gordon Brown claims predominantly. “Given Beijing’s ability to finance projects
the economic crisis of 2008 had a profound change in and its leverage over recipients of these loans, Chinese
the world economy. Before 2008, the majority of trade, made high-end industrial goods such as high-speed rail,
manufacturing, and investment were in Western nations, power generation equipment, and telecommunications
America and Europe. Brown said that had started to equipment are likely to be used widely,” according to a
change because of China. Now, the majority of trade, report from the Lowy Institute for International Policy.
manufacturing and production are in the emerging parts Still, “there are opportunities for non-Chinese firms as
of the world, a fundamental seismic change. That is why well,” according to one major global bank, which cited
the Silk Road project is so important, “it is a big idea, and potential contracts for multinational manufacturers of
I think we sometimes in the West don’t understand how heavy-duty machinery as an example. “Steel produced
big an idea it is.” The Former British Prime Minister highly in China will be used along the road, and that of course
said now this is a time of the re-emergence of China as an is good for demand for our commodities,” said one
important global economic power, “No other country in Australian mining executive who currently exports to
the world has ever enjoyed 30 years of consistently high China. Even small- and medium-sized enterprises (SMEs)
economic growth in the way that China has. I don’t think could benefit as international trade corridors expand
anyone should underestimate the economic and social digitally, as well as physically. Many of the Belt and
achievements of China over these years,” Brown said, “I Road’s import-export trade prospects are long-term, and
don’t think we should underestimate the importance of significant hurdles remain to the cleared. Yet there is also
the Silk Road.” Brown said what was needed was an inter- much room for improvement in the international trade
connected world, adding the Silk Road project was the routes in place today, with many countries along the old
embodiment of an inter-connected world. He believed Silk Road ranking in the bottom third of the World Bank’s
the world needs reformed global institutions, from an 2016 Logistics Performance Index. The potential benefits
updated World Bank and IMF to an expanded G20, to of China’s Belt and Road Initiative for businesses and
cope with the rise of China and Asia (Song, West). import-export trade are beginning to emerge, including
92
