Building a strong BRI ecosystem

Editor's Note: The Second Belt and Road Forum for International Cooperation was held in Beijing from April 25 to 27. China Daily interviewed top business executives from well-known multinational companies for their views and suggestions on the initiative.

Q1: What is your view of the Belt and Road Initiative proposed by China six years ago? Will the initiative be beneficial to your country or region?

Q2: Do you think the initiative will help fuel global economic growth and free trade and investment? Are there any new industries in your country or region made possible by the BRI?

Q3: How does the BRI benefit your business in China and worldwide? How does your company plan to further participate in the initiative?

Q4: What suggestions do you have for improving the implementation of the BRI?

Q5: Are there infrastructure projects that your country or region would not be able to implement without the BRI? Can you give examples of how these help the economy of your country or region?

Rachel Duan, senior vice-president, GE Company and president& CEO, GE Global Growth Markets

A1 Since the launch of the Belt and Road Initiative, we have made partnering with Chinese engineering, procurement and construction companies in the BRI markets a business priority for GE in China. GE estimates that over 1 billion people lack effective access to energy. By partnering with Chinese EPCs, GE is leveraging its comprehensive mix of power generation technologies, strong local capabilities in 63 of the BRI markets and global financing power, to bring energy to where it is most needed, to improve people's lives and fuel economic growth.

A2 By bringing together enterprises from multiple economies and providing the infrastructure necessary for economic growth, the BRI promotes the potential for greater trade and investment. In terms of infrastructure investment, we have already seen the BRI drive further investment in developing regions through our own business. While we began partnering with Chinese mainland EPCs over 20 years ago, we have seen nearly two thirds of our orders by capacity booked just since the end of 2013, spurred by Chinese EPCs increasingly going global under the Belt and Road initiative.

A3 In the past five years, the formalization of the BRI has brought focus, collaboration, accelerated growth, and strength to our work with Chinese EPCs. We've worked with over 30 EPCs in more than 70 overseas markets, providing a global network of technology, knowledge and tools, accompanied by local market expertise and on-the-ground support. Since the BRI was unveiled, GE's orders from Chinese EPCs have quintupled.

A4 We hope that the BRI participants can further develop an effective consensus on the current geopolitical and policy risks encountered by all parties in cross-regional and cross-cultural cooperation. We hope to see the promotion of participation by all parties, especially private enterprises and financing institutions such as GE in the BRI. We believe the most important improvement that can be made is in building a strong BRI ecosystem as the sheer scope and ambitions of the initiative demand broad-based support from both the public and private sectors across the world to achieve its potential.

A5 We believe that the key challenge for building infrastructure along the Belt and Road is not finding demand, but rather meeting the need for financing, dealing with geopolitical risk, and providing the right technological solutions for the right regions. The BRI has done a great job in bringing these factors together to execute projects in developing regions and improve the living standards of local communities through these projects. For example, the Hassyan project - the Middle East's first ultra-supercritical coal-fired power generation project - brought together all of these factors, with financing from the Silk Road Fund, EPC execution from Harbin Electric International, and boiler turbines and generators from GE.

Ada Leung, director of ACCA China

A1 Statistics show that China's trade and investment with other economies along the Belt and Road routes have maintained strong momentum, with the total trade volume rising to $6.98 trillion in 2017 from that in 2013. The trade growth with relevant countries was faster than the overall growth of China's foreign trade. As for infrastructure connectivity, projects including the China-Laos Railway, China-Thailand Railway and Port of Piraeus are progressing. The China-Europe freight trains, connecting China with 50 cities in 15 European countries, had made more than 14,000 trips by the end of March.

A2 The BRI is contributing to continued strong and sustainable growth in China while simultaneously benefiting from new commercial opportunities. We believe primary opportunities lie in infrastructure, finance and professional services, energy and resources, advanced manufacturing and transport, e-commerce and logistics. The UK and China have many synergies, such as UK and Chinese companies having complementary skill sets for international infrastructure projects.

A3 ACCA is committed to ensuring that our members are best placed to navigate BRI opportunities and uncertainties. We equip ACCA professional accountants with international expertise and a global mindset. We have a presence in 24 out of the Belt and Road economies, meaning ACCA is best positioned to support all our stakeholders - members, employers, educators, governments and policymakers - in capitalizing on the vast potential of this extraordinary undertaking.

A4 In ACCA's latest global study "How accountants can bridge the global infrastructure gap", respondents to the member survey were also asked what they saw as the biggest barriers to meeting the infrastructure needs of their countries. A few of the top global barriers were a lack of political leadership, a lack of finance or funding, and planning and regulatory barriers.

In response to these barriers, this report offers the following recommendations based on observed good practice. Governments should establish expert-led bodies to forecast infrastructure requirements and recommend projects on the basis of need, collect reliable data on the service potential of existing infrastructure and on the performance of past projects, and disaggregate expenditure on infrastructure to report both maintenance and new project spend.

A5 The BRI creates possible solutions to Africa's continental development agenda 2063, and promotes The China-Africa Cooperation, which started in October 2000, with the aim of strengthening cooperation between China and African countries. Taking transport as a key example, the BRI is highly strategic because transport networks in a country are like blood vessels in a human body. If the blood vessels are blocked, the whole body is paralyzed.

Jerome Jean Haegeli, Swiss Re Group chief economist

A1 The BRI is expected to bring not only the integration of China and other emerging markets into global development, but also enormous investment opportunities that contribute to economic growth, especially in emerging markets where we see particularly strong demand for infrastructure. The statistics speak for themselves: BRI covers at least two-thirds of the world's population and one-third of global economic output. Swiss Re Institute estimates that infrastructure investment in BRI economies outside of China by 2030 will amount to about $5.1 trillion; in China, it will be about $1.3 trillion. Truly huge opportunities.

A2 The BRI will boost global trade as well as infrastructure investment, especially when financed or cofinanced by the private sector, as it increases productivity growth and hence is positive for society. The BRI will improve connectivity among participating economies, thereby stimulating trade and investment growth, and socioeconomic exchanges.

A3 From the reinsurance/insurance industry perspective, we expect that the total premium potential from construction activities in BRI economies in the years 2015-30 could reach $34 billion, an estimated $21.5 billion of which could be booked to insurers in China. This compares to the total annual premium volume of $21 billion written globally in engineering insurance in 2017 with about $1.5 billion written in China. In all, the BRI will represent a significant increase in the volume of risk the market can absorb.

A4 First, private sector solutions should be further encouraged. We are thinking here about the global retirement savings gap where the private sector can and should play a larger role to alleviate the burden. Second, encouraging public-private partnerships is key. Both the private and public sector bring unique expertise to projects. Third, leverage multilateral development bank balance sheets. Pool individual infra projects and free up risk across the development finance system. This can be done through first-loss guarantee, co-investments with the private sector. And fourth, promote sustainable investment.

A5 Infrastructure investment is good for economic activity as it means investment and job creation, but it also helps the economy to run smoothly. I see sound infrastructure investment as a means to improve economic resilience. In today's lower global growth environment, we need more productivity increasing initiatives.

The reinsurance/insurance industry doesn't just underwrite risk but is also a long-term investor. In fact, their funds under management globally amount to about $30 trillion. Our call for action is to work with the public sector and relevant stakeholders in lowering barriers for private sector investment into infrastructure.

Lyu Shuping, president of Xylem China & North Asia

A1 Xylem's business in China and our offerings are closely in line with China's development needs and the national development strategy and priorities. A great example is our advanced water technologies and solutions to improve energy efficiency. The BRI opens the door for our China team to work with engineering contractors to provide Xylem equipment and solutions from China to solve water issues and water challenges in the Belt and Road regions.

A2 Speaking from a general perspective, the BRI will fuel economic growth, especially in those countries where China put more investments in terms of funding, manufacturing capability, sourcing and infrastructure construction. Along with the BRI, significant investments from the public sector as well as the private sector continually flow into emerging areas such as Africa, Southeast Asia and South Asia where infrastructure linked to power supply, water conservancy, and water transport and treatment are receiving more and more funding. It will directly benefit our business by bringing in more project opportunities.

A3 In our business sector, China's domestic market as a whole is segmented in terms of premium, value and price, which is mainly because China in general has sophisticated mechanical manufacturing capabilities and as a result there are plenty of choices for customers, and multinational companies generally are serving in the premium market because of the price. However, for those opportunities outside of China that Chinese contractors and consultants are participating in, they will be more willing to work with MNCs because of the end users' awareness of brands and preferences of specifications. Working closely with these Chinese project stakeholders in China, where we are able to provide all in one solutions and on-time call to quote services, will bring us more business opportunities.

A4 Regarding further improvements of the implementation of the BRI, due to different economic conditions and stages of economic development, in future, we hope to conduct bilateral communications with end-users more frequently to collect firsthand information and understand specific demands.

A5 I want to share a practice case of one of the largest wastewater treatment projects in South Asia under the BRI. The Dasher Gandhi Wastewater Treatment Project is located in Dhaka, capital of Bangladesh, led by Power China Chengdu Engineering Corporation. This project will help to build a wastewater treatment plant, reform lifting pumping stations and improve the wastewater networks. After the completion of the 10,000-metric-ton wastewater treatment plant, it will effectively improve local people's livelihoods, consolidate and promote friendly relations and cooperation between China and Bangladesh.

Alain Crozier, corporate vice-president, Microsoft, and chairman and CEO, Microsoft China

A1 The BRI has provided enormous new opportunities for companies to export their products, technologies and services to economies within the initiative's scope by creating favorable policies and business environments for these activities. Microsoft believes that companies taking advantage of the BRI will benefit from the power of innovative digital technologies to transform their manufacturing, sales, marketing and services, addressing the challenges they often face in global markets and strengthening their competitiveness.

A2 Today, Chinese companies are enhancing their global competitiveness through technological innovation. There is huge potential in both domestic and international markets. The BRI, combined with digital transformation, is likely to continue to accelerate this trend across industries and across continents.

ZPMC is a great example. Already the world's largest manufacturer of port cranes, ZPMC is now working on becoming the total solution provider for the digital port. Using Microsoft Azure IoT solutions and AI, ZPMC connects equipment ranging from giant cranes to shipping containers. Working with Microsoft, it is shifting its business from selling hardware to providing software and services. In doing so it has brought global connectivity to ports around the world and delivered added value to its customers.

A3 Microsoft's technologies and platforms including big data, cloud computing, IoT and artificial intelligence help Chinese companies develop businesses overseas in a seamless and effective way. With 50-plus regions and 70-plus certifications, Microsoft Azure has more regions and more certifications than any other public cloud platform. It is also the leading hybrid cloud platform in the world. It makes companies' IT infrastructure and operations "lighter", reducing costs as they go global, while enabling seamless connectivity between domestic and overseas IT systems so they can accomplish one-time development, worldwide deployment.

We will continue to innovate with China, with Chinese companies and partners, with our cloud platform, innovation ecosystem of more than 17,000 partners, big data, IoT and AI technologies - providing seamless connectivity in a cooperative, collaborative way to help people and organizations in China achieve more.

A4 We appreciate the policies issued by the Ministry of Industry and Information Technology and the China Council for the Promotion of International Trade to support the participation of small and medium-sized enterprises in the BRI. We believe that more concrete policies that support the technological transformation of SMEs in China will lead to more effective implementation of the BRI, and Microsoft is uniquely positioned to help these organizations succeed in their international ambitions.

Lothar Herrmann, president and CEO of Siemens China

A1 Siemens welcomes the development concept behind the BRI - reaching out to the world, connecting people and economies, and helping societies prosper in multiple regions of the world. With the BRI China is enabling the construction of infrastructure that will cover 65 percent of the world's population. This initiative has the potential to become the largest investment program of all time.

A2 The BRI has proved to be a strong force linking people and economies through cross-border activities with the potential that many regions can achieve social prosperity. Siemens recognizes and supports this idea, and has contributed to it through its vast technology portfolio, rich international experience, global footprint, strong knowledge of the local customs and legal environment, and the ability to create local value for these societies.

A3 In my view, the BRI is about infrastructure and bridge-building to connect societies, economies and cultures, and also about bridges between the physical infrastructure and the digital world. Siemens is a leading infrastructure company when it comes to linking those worlds and being able to establish a digital ecosystem. It is our vision to co-create a digital Silk Road together with stakeholders from around the world.

A4 It is the duty of the global political and economic community not to simply let the BRI happen, but to shape the initiative by co-creating projects that benefit not only China, but every receiving country. This, of course, will require a more careful due diligence of projects among all relevant stakeholders, especially those receiving countries, to ensure long-lasting quality and maximum efficiency. Equally important, the nature and one key success factor of the BRI, being open and inclusive, shall lead to a well-designed institution where all players can participate and collaborate on an equal footing and in an open and mutually beneficial way.

A5 The BRI has proved to be a powerful force for accelerating infrastructure development already in many participating economies. I'd like to mention just two projects, which showcase how we co-create values with our Chinese counterparts for the localities. Siemens worked with China Tianchen Engineering to build one of the world's largest soda ash factories in Turkey. This project, put into operation at the end of 2017, created around 2,000 local jobs. Furthermore, in September 2017, Siemens supported China Machinery Engineering Corporation in a gas power plant EPC project in Pakistan. The new power plant will be capable of providing an amount of electricity that is equivalent to the total consumption of about four million Pakistani households.

(China Daily 04/30/2019 page9)