China’s One Belt, One Road policy, a massive set of transportation and energy infrastructure projects, poses both opportunities and concerns for the West.
Launched in 2013, One Belt, One Road (OBOR), also known as the Belt and Road Initiative (BRI), consists of a planned “belt” of roads, bridges and railways, as well as pipelines and power plants. The “road”, focused on waterways, references the 21st-century Maritime Silk Road. Though the details are somewhat vague, the initiative is said to span 65 countries across Asia, the Middle East, Central and Eastern Europe and Africa. OBOR is expected to bridge the “infrastructure gap” and stimulate economic growth across large swaths of the globe. The economic benefits, at least in the short term, are extending farther into the West.
Western multinationals have been quick to jump in, providing equipment, technology and services to Chinese firms working on OBOR. America’s General Electric (GE) made $2.3 billion in equipment sales from OBOR projects last year. Vice Chairman John Rice expects double-digit revenue growth to come out of OBOR. GE is not alone. Global engineering firms including Caterpillar, Honeywell and ABB, along with logistics company DHL, industrial manufacturers Linde and BASF, and shipping firm Maersk Group are all getting slices of the pie.
The whirlwind of activity has raised the antennae of sceptics, who note that during China’s industrialisation over the past 15 years, its domestic firms ran construction projects over a vast expanse without the help of foreign firms. But construction abroad is another story. The OBOR experience so far suggests that Chinese groups have certain limitations, for instance in understanding wildly varying construction and engineering standards in different countries. Western partners are providing technology, as well as knowledge of local conditions.
Some executives express concern about longer-term ramifications. Chinese firms are looking to enter markets, in diverse industries from engineering and telecoms to shipping and e-commerce, currently dominated by Western companies. And while Westerners are profiting from OBOR itself, a closer look reveals a tipped balance. Data from the Reconnecting Asia Project, run by a Washington think-tank, show that 86% of OBOR projects have Chinese contractors, 27% have local ones, and only 18% have foreign contractors.
Further, Chinese firms are expanding their roles beyond contract work to project operation and investment. Western firms might only be able to cash in on OBOR as long as their technological advantage will carry them. This lead could be further curtailed through partnerships with their Chinese counterparts, as the latter will gain knowledge and advance.