Belt & Road: Slogan or Opportunity?

In 2013, China's President Xi Jinping spoke of rekindling the ancient Silk Road – a well-trodden trading route between East and West, which bears the footprints of famed Venetian merchant Marco Polo.

Xi envisaged a bold new global trading initiative, covering land and sea, which he called the Silk Road Economic Belt and the 21st Century Maritime Silk Road. His proposal was rare – a large scale international development initiative conceived and championed by a non-Western, non-democratic country.

Fast forward four years and the Belt & Road Initiative (BRI) has gripped the imagination of Chinese businesses, but it has a mixed report card on the international stage. Most outside China are aware of it, few know any detail about it, and even fewer can claim to have had any involvement with a BRI project.

Some professional services firms have attempted to position themselves to support it, but for the majority of governments and businesses, China’s BRI is a slogan. It is not a detailed and actionable plan to build an economic or commercial strategy around. It is something to drop into conversations but has little substance.

Part of the problem is defining what project is actually BRI-related, and what is merely a piece of infrastructure that may have been mooted for some time. Many in the last year or two have tried to provide this colour, including The Economist, but numbers and values can differ wildly.

Last month, in an effort to drive deeper global commitments to the BRI – and probably in an attempt to provide a sceptical West with additional comfort and clarity – President Xi convened a Belt & Road Summit in Beijing.

1,500 delegates turned up including 28 heads of state. Most of the leaders were not from Western nations, who instead sent less senior officials. Notable in their absence was anyone from India. In the end, Russia’s Putin was the star guest, alongside Turkey’s Erdogan, which did little to reassure Western audiences.

At the Summit, Xi called the BRI “a project of the century” that will benefit people across the world. He outlined numerous policy and financial agreements that had already been put in place, and he committed a further $100 billion from China’s development banks. The Ministry of Commerce claims China has already signed BRI contracts worth $304 billion with countries that have expressed interest.

The Summit did provide more clarity, but despite the President’s best efforts, scepticism remains, especially in Europe and the US. You can understand this. Successfully investing in far-flung emerging and often frontier markets is a risky and difficult undertaking; and few have experience doing so. A cautious Minister or CEO could be forgiven for only paying the BRI lip service.

But, before that becomes an entrenched Western view, it is worth pausing to consider what Chinese businesses are doing. This does not mean state-owned enterprises, which will be following orders when it comes to BRI (although that certainly matters too), but your everyday SME based in the mainland with ambitions to expand overseas.

A recent visit to Beijing, Shanghai and Shenzhen revealed, at least anecdotally, just how many of these companies are already actioning investment decisions around the BRI. There appears to be near universal belief that it will be a genuine driver of commercial opportunity and business growth.

It is true that China stands to benefit from BRI in a different way from the West, but how businesses approach it should be similar – calculating risk and reward. That equation does not seem to work for Western firms, which are largely sitting on the sidelines. Meanwhile, China’s business sector is well on the way to ensuring the BRI is a success.

Mainland officials know it will be challenging to deliver such a grand scheme, but private enterprise is clearly on board and already shaping itself to deliver it; and to reap the potential rewards. This positive sentiment from China’s grassroots businesses should, at the very least, be enough to make their Western counterparts take a deeper look at the BRI opportunity.    

The full text of President Xi’s Belt & Road Summit speech can be read here.