Earlier this year members of the London & South East and East Anglia branches and head office staff attended a London conference focusing on China’s Belt and Road Initiative. The conference was organised by the Hong Kong Trade Development Council. Later, last month, a seminar on the same topic was organised by Clarksons Platou, supported by the 48 Group Club and China Shipping Association of London. Institute members were present at that event also.
Although often still referred to as One Belt, One Road, China’s name preference for the grand scheme introduced over three years ago is now the Belt and Road Initiative. As is well known, there are two components - the Silk Road Economic Belt of land routes, and 21st Century Maritime Silk Road of sea routes - linking China with Asian, Middle East, African and European countries.
The Initiative is widely seen as likely to boost global shipping, but estimating the impact more precisely is proving difficult. Possible consequences from a few completed port and other projects are becoming clearer. Not all of these are positive. For example, crude oil movements just starting, through a new pipeline from Kyaukphyu port in Myanmar to Kunming, shorten the Middle East to China tanker voyage distance, cutting tonne-miles and tanker demand in this trade.
A more encouraging aspect is the potential for BRI infrastructure investments to enhance trade links and strengthen economic activity in the host countries. Improved transport facilities, road and rail as well as ports, giving better access to foreign markets (connectivity), along with other infrastructure such as power supplies, could result in faster economic growth. Additional seaborne trade could result.
Some commentators view the huge scheme, involving over 60 countries, as mainly benefiting the organisers, China. Chinese construction and manufacturing companies, together with operational management and finance, are prominent participants. Other advantages for China include enhanced energy security. But benefits for partner countries are also evident and, consequently, the Chinese government emphasises the ‘win-win’ nature of the arrangement.
For the global shipping industry, extra raw materials trade volumes may result from manufacturing associated with BRI infrastructure projects. Additional manufactured goods movements could occur in a variety of ways, both container and non-containerised. Currently it is only possible to generalise about these aspects, because many details of the exact locations of individual projects, as well as the overall magnitude and timing of various phases in the long term BRI, are not yet clear.
by Richard Scott FICS, London & South East Branch Committee, 5 June 2017