China Accelerates Construction of Shipping Hubs To Promote OBOR
According to the “2015 Xinhua – Baltic Exchange International Shipping Centre Development Index” released on 24th, shipping hubs located in Singapore, Hong Kong, Shanghai and Busan are listed as top 10 international shipping hubs, with Shanghai ranking at the 6th best shipping hub in the world.
Furthermore, shipping hubs in Qingdao, Ningbo – Zhou Shan, Tianjin, Guangzhou, Dalian, Shenzhen and Xiamen have stepped up to be qualified as international hubs. The upgrading of Chinese shipping hubs proves China’s active promotion and realisation of “One Belt One Road” through improving connectivity via sea.
Chinese Banks Strengthen Commitment Towards OBOR Financing
Bank of China and Agricultural Bank of China have unanimously made announcements on plans for financing OBOR-related projects.
Guo Ningning, Head of Bank of China Singapore branch, has announced on 27th July that the branch will provide $2-3 billion USD financing OBOR projects this year. The amount is to be accumulated up to $15-20 billion USD in the next 3 years.
This year, Bank of China Singapore branch has already invested a total of $1.5 billion USD in several industries, namely energy and environmental conservations, food processing, infrastructure and electronic information.
Similarly, Agricultural Bank of China Lianyungang branch has been actively promoting OBOR-related projects, with a total of $3.5 billion yuan investment this year. The amount will be accumulated up to $19 billion yuan in the next 3 years as the branch further strengthens its support towards OBOR.
IZP Technologies Group Plans Cross-Border Payment System
China’s big data processing conglomerate, IZP Technologies Group, plans to set up a Renminbi-denominated cross-border payment system. IZP has already signed a bank card settlement agreement with Lithuania’s central bank, as well as an agreement with Belgian service provider Cnext to issue a Euro-RMB dual-currency credit card.
Globebill, an online payment system operated by IZP, was among the pilot companies approved by the State Administration of Foreign Exchange for cross-border e-commerce foreign exchange and payment.
According to Luo Feng, CEO of IZP Technologies Group, Globebill charges a transaction fee 40 to 80 % cheaper than visa. He further elaborated that this new “Visa” system designed for OBOR aims to minimize transaction fees, allowing small and medium-sized businesses to grow.
What We Think:
Since the official launch of the OBOR strategy, its main focus lies on strengthening physical connectivity between countries involved, through a massive number of construction projects to build railways, seaports and airports.
However, in connecting to developed markets, “online” connectivity is as equally important as these countries have a flourishing e-commerce industry to be tapped on. This week’s news on 29th highlighted a key issue that has to be addressed in building a highly connected and globalised e-market for consumers worldwide – a payment system that can accept different currencies.
This is only the tip of an iceberg as there are many other challenges ahead in constructing a globalised online market, such as the absence of a reliable globalised logistics system from China, as well as lacking of telecommunication facilities along the OBOR.
A globalised online market can allow Chinese retailers to “go out” without having to bear the risk involved in setting up a brick-and-mortal store overseas, such as complexity in employment law in different places. Resources can also be more centralized for improvement of services and quality of goods. But for now, time and investment is hugely required till we could witness e-commerce industry to flourish along the OBOR.