Belt & Road News Digest : November, 2015
Image Source: twwiki.com
Chinese Economist Suggests RMB Bond
As HKEx’s Chief Economist of China Ba Shusong attended a B&R forum held in Hong Kong few days ago, he pointed out that the scale of exchange between Renminbi and other currencies will see a sustainable increase as the People’s Bank of China has signed Renmenbi currency swap agreements with Central banks from 9 different countries.
Ba also stated that, although Hong Kong still stands as the largest Renmenbi offshore clearing centre in the world, trading volumes at the relatively new clearing centre in London could surpass those of Hong Kong if the city meets a market fluctuation.
As the bond market in Hong Kong is still rather weak, Ba suggests the city can launch more Renminbi-denominated bonds or financial products to fit the financial needs at the Belt and Road.
Image Source: Kerry Logistics
Kerry Logistics Planned for B&R
Kerry Logistics director Samuel Lau believes that demand for logistics transporting building materials and equipment from various locations will see a rise as infrastructure is accelerated in the Belt and Road region.
The group has already made relevant strategic plans, and wishes to set up a logistics platform in the Asia Pacific area by ways such as acquiring overseas courier company.
Lau thinks, as Hong Kong is equipped with extensive logistics experience and knowledge, low tax rates and efficient customs clearance procedure, large brands are likely to choose Hong Kong as a logistics hub. Kerry Logistics have now already linked up 7 countries in Southeast Asia in order to develop its services in land logistics.
Image Source: tech.sina.com
China FDI in B&R Rises 66.2% by First 9 months
According to the spokesman of the Ministry of Commerce, Shen Danyang, FDI in the Belt & Road region from Chinese enterprises in this year’s first 9 months amount to USD $12.03 billion, an increase of 66.2% compared to same period in the previous year.
Countries receiving most of these FDI include Singapore, Kazakhstan, Laos, Indonesia, Russia and Thailand.
Image Source: k618 news
CEE Countries Intend to Work with China on B&R
Under the framework of the “16+1 Initiative”, the 4th meeting among leaders from 17 states that include China and CEE countries was held yesterday. Together the 17 countries laid down the structure of “the Suzhou Guidelines for Cooperation between China and Central and Eastern European Countries”, which was also announced on the same day.
According to this year’s Guidelines, CEE countries and China have expressed intentions to sign corporation deals for development at the Belt and Road. China also welcomes qualified CEE financial institutions to apply as indirect participants at the initial phase of the Renminbi cross-border payment system.
What We Think:
When mentioning the Belt and Road, most people would be likely to associate with the ancient Silk Road and think of the land Silk Road that starts from Xian, and the Maritime Silk Road that begins from Fujian. In fact, there are a number of extensions reaching various countries and regions that co-exist in the current Belt & Road framework (which also makes it more possible for every Chinese province to work with the country’s initiative).
However the routes might be, the Central Eastern European (CEE) region acts as a gate that allows China to better develop its market in Western Europe, as well as to seek for collaborating opportunities with individual countries.
During the initial Eurozone crisis that began in around 2008-2009, when the bigger-voice EU members each had too much on their plates such that some even suspended their financial aids to some members still at developing stage, CEE countries were still able to maintain their impressive economic development, and had also begun to actively look for financial resources outside the EU.
Among the 16 countries of the CEE region, many countries have a sound legal framework. There is still room for development, but inflation and salary levels are still at a level where they won’t cause too much stress on costs control. By relocating factories to CEE and utilizing those new railways that are already in full operation, goods can also be distributed throughout the European market in a more efficient way.
Apart from the above, there are also a number of advantages to Hong Kong and Chinese enterprises developing their markets in CEE from different aspects. Unfortunately due to limited space of the column, please allow a revision on the topic in the future when we have another chance.
The “16+1” is a cooperation that has targeted at a right time and meet the needs of many parties. It is to believe that the “16+1” can even accelerate the development of the B&R, while not being restrained by the framework of the B&R. CEE will probably be the new darling of various business investments in the next few years.