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Monday, June 12, 2017, 18:42
Connecting the dots
By KARL WILSON and XU WEIWEI
Monday, June 12, 2017, 18:42 By KARL WILSON and XU WEIWEI

Besides transport infrastructure, information technology will be key to the Belt and Road push for connectivity

The Belt and Road Initiative is not just about connecting ports, railways and highways. It is also about freeing up the flow of information and data to enhance digital links between economies.

In his opening address to the May 14-15 Belt and Road Forum for International Cooperation in Beijing, President Xi Jinping said: “We should focus on the fundamental issue of development, release the growth potential of various countries and achieve economic integration and interconnected development and deliver benefits to all.” 

Connectivity, especially information technology (IT), will be key to the Belt and Road Initiative, said Gabriel Wong, corporate finance leader for PwC China in Shanghai.

Lee Boon Keng, associate professor, banking and finance, at the Nanyang Business School of Singapore’s Nanyang Technological University, agrees.

“Advances in IT are one of the most overlooked developmental stories in China,” he told China Daily Asia Weekly. “Largely led by the private sector, it has become internationally competitive and impactful.

“Companies such as Alibaba and Tencent are redefining e-commerce, payments and even banking. These private companies have already extended their presence in many parts of the world, and are likely to ride on the Belt and Road Initiative to gain a deeper footprint.”

Lee said companies in the e-commerce and payments sectors will lead the Belt and Road IT drive, with the key players being Alibaba and Tencent. “This will likely advance into finance and investment,” he added.

China has been transformed by IT, especially in the area of e-commerce. It has created a logistics boom and millions of jobs, lifting many people out of poverty. As these IT companies push their business models along the Belt and Road, the same benefits will be felt in the region and around the world.

President Xi Jinping speaks during a news conference at the Belt and Road Forum for International Cooperation in Beijing on May 15. As well as infrastructure development, the China-led initiative is about the free flow of information and data to enhance digital links across economies. (AFP)

Synergy: Exchanges of advanced technology and talent will benefit mankind

PwC’s Wong said one thing that came through at the forum was the importance of connectivity.

“You are starting to see Chinese telecom companies already working closely with some countries, installing optical fiber connections,” he said.

“This will create enormous change, especially in the e-commerce area. But not only that, you will see huge benefits in the logistics, telecoms, hardware, mobiles and software fields, just to name a few.

600 projects, number of programs funded by China Development Bank

“It will create an enormous e-commerce market in all countries along the Belt and Road.”

The Belt and Road Initiative is an ambitious strategy for building connectivity between China and more than 60 other nations. 

It involves building high-speed railways, new highways and modern seaports, with the potential to accelerate infrastructure development in many Asian developing countries.

It will also link China with Europe, as well as East Africa and Oceania.

“It will eventually connect more than 60 percent of the world’s population, and make up about one-third of the global economy,” said Rajiv Biswas, Asia-Pacific chief economist for global consultancy IHS Markit.

Preliminary estimates show that in the next decade, China’s total investment in the countries along the Belt and Road is expected to reach US$1.6 trillion, according to a recent report by consultancy EY.

HSBC in a note in May said total trade between China and the Belt and Road countries exceeded US$3 trillion during 2014-16, while overseas direct investment in Belt and Road countries surpassed US$50 billion over the same period.

“Chinese companies set up 56 economic cooperation zones in over 20 countries, generating around US$1.1 billion in tax revenue for host countries and creating 180,000 jobs,” the note said.

The Asian Infrastructure Investment Bank has provided US$1.7 billion in loans for nine projects in Belt and Road countries, while the Silk Road Fund has made US$4 billion in investments.

4 billion dollars, investment by Silk Road Fund in Belt and Road projects

“China Development Bank has funded more than 600 projects in countries along the routes in infrastructure, industrial capacity cooperation and financial cooperation, with loans issued exceeding US$110 billion,” the note said.

“Export-Import Bank of China supported 603 Belt and Road projects in international capacity cooperation and equipment manufacturing, and the bank’s loan balance increased 13 percent year-on-year in 2016.”

China’s three telecom operators are working with carriers along the Belt and Road on telecom roaming and infrastructure construction, pushing the export of China’s homegrown technology and building an international platform.

China Telecom has focused on three regions: Eurasia, Greater Mekong and Africa. 

China Comservice, a subsidiary of China Telecom, plans to build Africa’s information superhighway linking China and Africa with an investment of more than US$15 billion.

According to China Telecom, the planned length of the optical cable will be 150,000 kilometers and cover 48 African countries.

China Unicom is expanding its network into countries along the Belt and Road, laying optical cables connecting Central Asia, Southeast Asia, Africa and South America. 

One area that is showing significant progress is the China-Pakistan Economic Corridor (CPEC).

“This is an extremely important part of the Belt and Road Initiative,” said Li Xiguang, director of Tsinghua University’s Center for Pakistan Culture and Communication Studies.

150,000 kilometers, length of optical cable China Telecom plans to lay in Africa

“It contains huge potential for economic and trade opportunities,” he said. “Huawei is constructing a fiber optic cable between Pakistan and China, a US$44 million project, with about half of it finished.”

Li also pointed to Pakistan signing a memorandum of understanding with Alibaba on May 16, which “means the Chinese company has ambitions to enter the local (Pakistan) market”.

David Song, founder and CEO of the Global Mobile Game Confederation, which organizes a major industry conference annually in Beijing, said the Belt and Road Initiative is “one of those once in a blue moon” opportunities for Chinese enterprises to easily export their products.

“Especially in the Southeast Asian region, which has culture and traditions similar to those of the Han Chinese,” Song said. “For example, it will be easier for Chinese mobile game products to enter countries that share similar cultural norms or values.

“At the same time, against this backdrop, China could help those participating countries and import good technologies and products back to the country. 

“It is a win-win solution. Acting as a bridge linking different countries, with the principles of mutual complementarity, the Belt and Road will be a collaborative effort linking cultures and technology among its members.”

Song said the Belt and Road Initiative signifies the revival of Chinese culture, science and technology.

“We need to carry on the sharing and innovative spirit of the ancient Chinese people who made popular in the world great inventions such as paper-making and printing,” he said.

“The Belt and Road enables us to spread the technological achievements of China into different regions so that those living there can also enjoy the fruits of technology advancements.”

Song said China’s technology will help many countries. “Chinese enterprises need to go there to help build technical capability, and support industry upgrading along the Belt and Road. This will bring real change.”

He said Chinese companies should not use this initiative simply as a money-making venture but as a way to “help growing nations solve common problems”.

Chen Hsiao, COO of King Live Media, a producer of mobile video clips, said the Belt and Road will help facilitate the “exchange of advanced technologies between and among different countries in Asia, Europe and Africa”.

Speaking to China Daily Asia Weekly, Chen said: “Israel and India have their advantages in the areas of artificial intelligence, biomedicine and genetic engineering that we can collaborate with, and China has strengths in the space and aeronautics industries that can be adapted for commercial and civil use. 

“China is very good in optical engineering, which has great significance for the augmented reality (AR) and virtual reality (VR) industries. The West excels in making software and hardware, but China could produce very refined, exquisite lenses and other gadgets for the AR and VR.

“This reciprocity can produce technologies that benefit the lives of people and benefit mankind.”

He said another benefit of the Belt and Road will be the transfer of talent between countries.

“Multinational high-tech companies such as Google, Facebook, Alibaba and Tencent have all employed staff from various countries and cultural backgrounds.

“This trend will continue to be strong in the globalized world.”

Contact the writers at karlwilson@chinadailyapac.com

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