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How will supply chains be affected by China’s Belt and Road projects?
Controversial centre piece of Xi Jinping’s foreign policy has spent billions with plenty more in the pipeline, but what are those projects?
China's Belt and Road Initiative, proposed by President Xi Jinping nearly six years ago, is a critical piece of China’s foreign policy, both as an image exercise and on a more practical note. These objectives are intertwined as the program aims to secure Chinese lines of communication, increase market access, employ Chinese companies globally in large infrastructure projects and to increase its presence as a global superpower in numerous countries. Thus far Belt and Road has been felt by no fewer than 125 countries and 29 international organizations through 173 cooperation agreements under the initiative framework as of March 27 2019.
It is not without controversy, however, as governments have begun to ask more questions about what is expected and required of them as they participate, particularly when it comes to the long-term value of investments and often onerous repayment schedules.
Core to the initiative have been ports, railways, airports and roads, all of which have clear implications for the supply chains in those countries and also globally. This is especially so as many of these are in developing economies, which still have enormous future growth potential that can accelerated by increased access to resources and markets. Here are some of the major projects that have been completed, are being constructed or are planned …
Jakarta-Bandung high-speed rail, Indonesia
The 142-km Jakarta-Bandung high-speed railway, connecting the Indonesian capital Jakarta with Bandung, is now under construction, after China and Indonesia signed an agreement in October 2015 to establish a joint venture to build and operate it.
As a part of the Belt and Road Initiative projects in Indonesia, the high-speed railway is the first to use China's high-speed railway standards, technologies and equipment on a foreign line.
It being constructed and operated by a China-Indonesia consortium of firms led by China Railway Corp and Indonesian state-owned PT Wijaya Karya Tbk and is to be funded mainly by loans from China Development Bank.
The high-speed rail is expected to have a maximum design speed of 350 km/h and be capable of transport passengers and goods within 45 minutes between Jakarta and Bandung.
Abuja–Kaduna Railway, Nigeria
The Abuja–Kaduna Railway, as the first segment of the Lagos–Kano standard gauge project, the first standard gauge railway in Nigeria and West Africa, was officially inaugurated and started commercial operation on July 26, 2016.
The railway, constructed by China Civil Engineering Construction Corporation, is the first overseas railway fully adopting the Chinese railway standard. Spanning 186.5 km, by January 11 2019, the train service had delivered 1.23 million passengers and had safely operated for 900 days without any major accident recorded since its inception.
The Ethiopia-Djibouti Railway, the first electrified railway in East Africa with built on Chinese standards and with Chinese equipment, officially commenced commercial operations in January 2018.
With a length of 751.7 km, a design speed of 120 km per hour, 45 stations and total investment of about $4 billion, the railway was jointly constructed by China Railway Group Ltd and China Railway Construction Corp Ltd. It is a good example of how Belt and Road initiatives are often built as it has been purely built the first with a full industrial chain Chinese enterprises have built overseas.
The railway reduces travel time from the Djibouti port to Addis Ababa to less than 12 hours from the previous three days.
The 414-km China-Laos Railway runs from Boten, the northern Lao town bordering Southwest China's Yunnan province, to Vientiane, capital of Laos, with an expected operating speed of 160 km per hour.
The electrified passenger and cargo railway, which started construction in December 2016 with the full application of Chinese management standards and technical standards, is scheduled to be completed and open to traffic in December 2021.
Ports and terminals
Colombo Port City, Sri Lanka
The China-funded Colombo Port City, the largest project between China and Sri Lanka under the Belt and Road Initiative, completed land reclamation of 269 hectares in January.
In addition, hydro-structure construction will be completed by the middle of this year. The port city's municipal facilities construction is expected to be completed in July 2020.
The $1.4 billion project, co-developed by Sri Lanka's government and China Communication Construction Co Ltd, is expected to bring 83,000 jobs to locals in 20 years.
Piraeus Port, Greece
Piraeus Port is the largest port in Greece. On Aug 10, 2016, COSCO Shipping (Hong Kong) Co Ltd, a subsidiary of China COSCO Shipping Group, became a controlling shareholder of the port and started operating the facility.
Around 290 million euros are expected to be invested by the company for the expansion of a cruise terminal, improvement of a ship repair wharf and a new multi-storey garage of roll-on roll-off ship wharf.
Doraleh Multi-Purpose Port, Djibouti
The Doraleh Multi-Purpose Port in Djibouti, constructed by China State Construction Engineering Corp and partially owned and operated by DP World and China Merchants Holdings, opened on May 24, 2017.
The port, with a contract amount of $421.7 million and a designed handling capacity of 7.08 million tons a year, is CSCEC's first hydraulic project in Africa. All of the port's terminals have direct access to the Addis Ababa–Djibouti Railway, which provides landlocked Ethiopia with railroad access to the sea.
Zeebrugge Terminal, Belgium
China's COSCO Shipping signed an agreement with the Port of Zeebrugge on Jan 22, 2018, for a 50-year concession on the CSP Zeebrugge Terminal.
Muara Port, Brunei
Muara Port has the largest container terminal and is also the main international trade passage for Brunei. In February 2017, the container terminal of the port was handed over to the Muara Port Company Sdn Bhd, a joint venture established by China's Beibu Gulf Port Group and Brunei's Darussalam Asset.
Muara Port is the only public dock in Brunei and is an important part of the construction of the Guangxi-Brunei Economic Corridor. In the first 10 months of 2018, Muara Port handled 93,257 TEUs (twenty-foot equivalent units), a year-on-year increase of 7 percent.
Gwadar Port, Pakistan
From a small, remote and underdeveloped fishing village located in the Arabian Sea, Pakistan's Gwadar Port now has a fully functional port terminal, a business centre and a free zone.
The port, which opened on Nov 13, 2016, has been operated by China Overseas Port Holding Company since 2013. The Gwadar Port is a flagship China-Pakistan Economic Corridor project under the Belt and Road Initiative.
According to the COPHC, dozens of companies in different businesses such as hotels, banking, logistics, food, steel, fish processing and renewable resources have entered the free zone.