China President Xi Jinping announced renewed focus on the “Belt and Road Initiative” (BRI) during the two-day infrastructure summit for international cooperation held on May 14-15.
BRI involves the development of trade routes connecting China with Asia, Africa, and Europe. It aims to promote regional collaboration for economic development by making investments in roads, railways, and other infrastructure that promote connectivity.
Win-Win for all
While the project is expected to create new markets for Chinese companies, address its industrial over-capacity, channel its large forex reserves, promote its currency on the international stage and increase geopolitical clout, it is also expected to help businesses in the participating countries gain access to international markets and increase business returns.
Resultant local investment opportunities
The project will help open up local businesses in cities along the route to more opportunities for trade, investment, and job creation. While businesses that focus on infrastructure building, construction, and mining would be the obvious beneficiaries of the project, there would be multiple opportunities for the broader business ecosystem as well. These include new investment opportunities for private equity firms, project finance, joint venture consulting opportunities for financial/legal advisors and opportunities for realtors to buy real estate in underdeveloped areas along the road route
Despite execution risks, the project promises a plethora of opportunities in a world that is plagued by tepid economic growth and interestingly pitches the East’s collaborative policies against the West’s isolationist policies.
Will this initiative have implications for China’s stock market? Read more here