OBOR News Digest: 24th July, 2015

OBOR News Digest: 24th July, 2015

Categories: News


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Ningxia, China, 20 July, 2015
Ningxia Seeks Opportunities In Halal Industry Via “One Belt One Road”

With one-third of its population being Muslims, Ningxia and Arab countries adopt the same customs and share similar cultural background.

Ningxia sees this as an opportunity to promote its halal industry along the rapid development of OBOR strategy.

Wang Heshan, vice chairman of the Ningxia Hui Autonomous Region Government, said the Halal industry will play a crucial role as Ningxia “opens up to the West”. Ningxia will further explore and develop areas such as halal food, ethnic clothing, cultural tourism and more. Currently, Ningxia Halal Food International Trade Certification Center has been officially recognised by 15 halal certification bodies in 12 countries including Malaysia, Saudi Arabia, Egypt, Singapore and Russia.

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Jiangsu, China, 20 July, 2015

Jiangsu Sets Up “One Belt One Road” Investment Fund

Jiangsu Provincial Department of Finance, Department of Commerce and SOHO Holdings Group have officially signed a memorandum of cooperation to set up an “One Belt One Road” Investment Fund. The fund aims to promote efficient use of social capital, allowing individuals and private enterprises to invest in OBOR-related industries and projects, and hence accelerating internalization of Jiangsu.

The fund has an 8-year validity period, carrying a 3 billion yuan worth initial capital. The Fund is estimated to accumulate to 10 billion yuan in 2017, and 30 billion yuan in 2020.

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Beijing, China, 21 July, 2015

Integrated Custom Clearance Procedures Reap Early Harvest

Custom clearance procedures reform for a more integrated system in Chinese provinces that are involved in the “Silk Road Economic Belt” is starting to show positive results. Since its official implementation on 1st May, corresponding customs have received 1.2 million integrated custom declaration forms, allowing more enterprises to enjoy higher productivity with more convenient and efficient customs clearance procedures.

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Beijing, China, 21 July, 2015

Chinese-Backed Projects In OBOR Increased by 16.7%

In the first half of this year, Chinese enterprises have directly invested $7.1 billion in OBOR countries, marking an increase of 22.2% compared to last year.

A total of 1,401 project contracts have been signed by Chinese enterprises along the OBOR region within the 6-month period. These contracts amount to a total worth of USD 37.6 billion, nearly half of the country’s combined overseas contract value, and an increase of 16.7% year-on-year (YoY). Completed projects in OBOR countries generated a turnover of $29.7 billion, marking a YoY increase of 5.4%.

The massive sum of foreign direct investment (FDI) has flowed mainly to regions like Singapore, Indonesia, Laos, Russia, Kazakhstan and Thailand.

24th July
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Beijing, China, 22 July, 2015

PBOC Injects $31 Billion To Two OBOR-Related Policy Banks

The People’s Bank of China (POBC) has injected a combined of US $31 billion capital into two policy banks that are connected to China’s Silk Road Initiatives.

The central bank has converted US$16 billion worth of foreign exchange loans to equity shares in the China Development Bank (CDB). US$15 billion worth of forex loans has also been converted into equity shares for Export-Import Bank of China (Exim). Following these moves, POBC has emerged as the biggest shareholder of the China Exim Bank and the 3rd largest shareholder of the CBD.


What We Think:

OBOR strategy has brought provinces in China opportunities to grow. However, evaluation and selection of industries to develop can be a deciding factor to a province’s long-term prosperity.
This week’s news published on 20th on Ningxia’s halal industry serves as a good example.

Currently, China is facing the problem of excess production. Exporting excess capacity to overseas market, under the framework of OBOR, may create a temporary lucrative market for over producing industries, and might entice even more related companies wanting to gain a piece of the action. Such a strategy is likely to induce only a short to mid-term economic growth, as well as to accelerate market saturation, ultimately leaving the industry to wither – the very last thing any business man would want to witness.

To ensure long-term sustainable economic growth, it is vital that each province finds an “exclusive” industry of its own. This is well exemplified by Ningxia’s focus on halal industry, which has a strong competitive edge in due to its unique mixed of population, culture and customs. By finding the unique industry that fits its very own characteristics and strength, a province will be able to create an irreplaceable role for itself in the OBOR initiatives. This is the only way that can ensure a long-term and sustainable benefit for the citizens and the province as a whole.