The Belt and Road Initiative:

The First Seven Years

A CEIC Insights Thematic Report

Copyright
THE BELT© 2020
ANDCEIC,
ROADall rights reserved.
INITIATIVE: THE FIRST SEVEN YEARS 1
A CEIC Insights Thematic Report
CEIC INSIGHTS TEAM
HEAD OF MACROECONOMIC RESEARCH
Alexander Ivanov

EDITORS
Radina Koleva
Xintong (Olivia) Wu
Mingfang Kan
Biliana Hristova

SENIOR DESIGNER
Elena Gamalova

DESIGNER
Hristiana Inkyova

CONTACT
editorial@isimarkets.com
CONTENTS

Foreword

01
Introduction

02
Risks, Challenges and Outlook

03
Economic Corridors
THE BELT AND ROAD INITIATIVE: THE FIRST SEVEN YEARS 4
A CEIC Insights Thematic Report
Foreword
According to a popu-
lar cliché the first seven
years of a child’s life are
crucial for their further
development and ulti-
mately adulthood. Seven
years after the launch of
the ambitious Belt and
Road Initiative (BRI) by
Radina Koleva
Macroeconomic Researcher the Chinese government
in 2013, it seemed prop-
er to evaluate its progress and take a bold glimpse
into the coming years. However, 2020 began with the
COVID-19 outbreak, which extremely quickly disrupt-
ed pretty much every aspect of life, pushing the world
into the next big economic downturn.
The BRI involves predominantly big infrastructure
projects, which take time to get completed. Due to
their nature, infrastructure projects take longer to
plan, even longer to execute, often get delayed and
are politically sensitive. Nevertheless, this does not
mean that the pandemic did not get into the way of
the BRI’s progress. The unprecedented closing of bor-
ders worldwide and the virtual halt of international
travel, including work-related migration, proved yet
another popular cliché – that decision makers, both in
the public and private sector, take for granted factors
like free mobility, which are crucial for the unimped-
ed economic development. And as of October 2020,
it looks like the outbreak, despite the many warning
signs, caught the entire world off guard.
Even before COVID-19 the global macroeconomic en-
vironment was far from favourable. The uncertainty
around the US-China trade relations and the sustained
economic slowdown led to increased speculations
about the next crisis. However, COVID-19 and “the
great lockdown” as the IMF dubbed the crisis, not only
introduced new challenges, but exacerbated proba-
THE BELT AND ROAD INITIATIVE: THE FIRST SEVEN YEARS
A CEIC Insights Thematic Report
bly the most acute one – indebtedness. Since many of
the BRI projects are carried out through loans provid-
ed by Chinese state-controlled financial institutions, a
key concern for the host countries remains the piling
up of debt and its conditions. COVID-19 prompted ex-
traordinary government spending that fuelled budget
deficit, which is ultimately going to be financed by
more debt. In order to keep their public finances un-
der control, governments might choose to temporarily
cut spending on “non-essential” longer-term projects,
and infrastructure ones might not be spared. On the
other hand, a valid concern for China’s public finances
is whether and how the loans Beijing provided would
get repaid. According to the latest IMF projections,
emerging markets’ average public debt-to-GDP ratio
will jump from 52.4% in 2019 to 63.1% in 2020 and fur-
ther to 66.7% in the following year.
Regardless if the pandemic proves the main catalyst,
the BRI is bound to shift its focus, probably gradually.
The authorities in China already expressed intention of
building the Health and the Digital Silk Roads. These
ambitions are definitely worth following. Moreover, this
shift towards cooperation in the field of healthcare and
digital economy might prove an opportunity for Bei-
jing to address the existing concerns around the initia-
tive, regarding good governance, environmental risks,
potential dependencies and political influence.
It would not be exaggerated to say that the BRI seems
like a separate chapter in the efforts of international
economic cooperation. This report prides itself on
providing relevant data and objective analysis in a
concise manner, which allows one to confidently navi-
gate through any BRI-related information and to make
fair judgement and informed decisions.
5
 01
Introduction

THE BELT AND ROAD INITIATIVE: THE FIRST SEVEN YEARS 6

A CEIC Insights Thematic Report
 01 INTRODUCTION

China’s Belt and Road initiative (BRI) is a plan to pro-

mote international cooperation and more inclusive
development around the world, according to China’s
National Development and Reform Commission. It
was initially proposed by president Xi Jinping in 2013
as a plan to build connections along two historical
trade routes. The Belt, connecting China and Europe
through Russia and Central Asia; and the Road, which
refers to the old maritime Silk Road that covers the
ports and shipping lanes from China to Venice via the
South China Sea and the Indian Ocean while also con-
necting China to the South Pacific.

Two years after the announcement of the BRI, the first

official document, named Vision and Actions on Joint-
ly Building Silk Road Economic Belt and 21st-Centu-
ry Maritime Silk Road, was published and served as a
blueprint for the initiative. It is considered the corner-
stone of the BRI, because it is issued by the National
Development and Reform Commission, the Ministry of
Foreign Affairs, and the Ministry of Commerce of the
People’s Republic of China, with the State Council’s
authorisation. The blueprint emphasises five key prin-
ciples: mutual respect for each other’s sovereignty and
territorial integrity, mutual non-aggression, mutual
non-interference in each other’s internal affairs, equal-
ity and mutual benefit, and peaceful coexistence.

Global Macroeconomic
Background
The official document from 2015 acknowledged that
the macroeconomic environment ahead is gloomy,
because the scars from the 2008-2009 crisis were
still present: high global inequality, fragile internation-
al trade and weak investments. The world was still
struggling with sluggish economic growth and rising
indebtedness. In 2015, the global real GDP growth
rate was 3.28%, lower than the figure before the crisis.
Moreover, the global macro leverage, a broad meas-
ure of indebtedness, climbed to 230.6% of GDP in 2015,
from 201.5% of GDP in 2008.

THE BELT AND ROAD INITIATIVE: THE FIRST SEVEN YEARS 77

A CEIC Insights Thematic Report
World GDP Growth, %

5.38 5.41 5.33

5.13
4.87 4.81

4.00
3.75 3.72
3.45 3.55
3.32 3.36 3.28
3.14
2.90 2.90 2.91

2.38

-0.49

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Source: OECD, CEIC Data

Total Credit to Non-Financial Sector, % of GDP

271.9 277.5
267.4 269.4 268.0 266.4 265.0 265.5
261.9 255.6
242.8 239.2 244.4
234.3 231.2 230.6 233.6 233.5
222.3 227.5 226.7 225.4
217.1 219.5
205.8 210.5
198.3 201.5
191.3
180.0 182.8
170.8
153.0 158.6
141.4 138.7 144.8
131.3
114.7 116.6 120.3
106.9

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Emerging Markets Advanced Economies All Reporting Economies

Source: Bank for International Settlements, CEIC Data

THE BELT AND ROAD INITIATIVE: THE FIRST SEVEN YEARS 8

A CEIC Insights Thematic Report
 01 INTRODUCTION

As of 2020, the global macroeconomic challenges

are far from resolved and the COVID-19 pandemic al-
ready started taking its toll on many economies. The
outbreak has come to the forefront of the threats and
will most certainly cause an economic crisis of a scale
similar to the 2008-2009 collapse. That means that the
problems on the BRI agenda – slow growth, protec-
tionism and populism – will become even more pro-
nounced.

When launching the BRI, Beijing explained its ambi-

tious endeavour with the intent of protecting the cur-
rent global trade and investment system and of miti-
gating the damages from the de-globalisation trends
back in 2013-2015. Since China’s economy is closely
connected with the world economy via the global
The problems on the
value chains (GVCs), the Chinese government wor- BRI agenda – slow
ried that the de-globalisation trend is likely to hurt the
economy and lead to domestic job losses. According
growth, protectionism
to the UN Conference on Trade and Development, the and populism – will
global GVC participation rate declined to 46% in 2018
from 51% in 2008 due to the headwinds caused by
become even more
de-globalisation after the global financial crisis. Chi- pronounced
na’s GVC participation rate slipped to 45% in 2018 from
around 47% in 2008.

Global Value Chains Participation Rate

61%
60% 59% 60% 59% 59%
59% 58% 59%
57% 56% 56% 57%
56%

47% 47% 48%

47% 47% 46% 46%
44% 45% 44% 45%
43% 44% 43%

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

China World

Source: CEIC Data

THE BELT AND ROAD INITIATIVE: THE FIRST SEVEN YEARS 9

A CEIC Insights Thematic Report
Beijing argued that through BRI, China is building re- Beijing argued that
gional economic cooperation to improve the free
movement of goods and services. Consequently, the through BRI, China is
flow of labour, capital and entrepreneurship could im- building regional economic
prove the efficiency of resource allocation and deepen
market integration. The BRI is also expected to set a cooperation to improve the
practice of global governance and achieve better eco- free movement of goods
nomic policy coordination. Further, the initiative is in-
tended to promote the connectivity (people-to-people and services
and infrastructure) of Asia, Europe and Africa and their
adjacent seas, with the emphasis being on infrastruc-
ture.

The fourth goal concerns financial infrastructure. Since

Main Goals and the the infrastructure projects require a large amount of

Benefits for China money, sustainable, transparent and reliable financial

support is essential. The goal of building financial infra-
In 2017 Chinese president Xi Jinping outlined the goals structure could promote the internationalisation of the
of BRI. The first goal is policy coordination, which lays RMB. There are many benefits of the RMB internation-
the groundwork for joint actions of the participating alisation, the most significant one being that Chinese
countries and international organisations thus ensuring enterprises are likely to reduce the exchange risks of
the success of the remaining four goals. The benefit the international trade and investment, thereby cutting
of policy coordination is that China’s foreign policy soft down transaction costs.
power could be strengthened.
The fifth goal is about promoting cultural exchange,
The second goal is infrastructure connectivity. It is a more inclusive education, and better communication
premise for unimpeded trade, financial integration and across the participating countries.
connecting people, because the weak infrastructure in
transportation, energy and telecommunication ham-
pers the free flow of capital, labour and technology.
For China, these infrastructure projects could partly
address the manufacturing overcapacity issues and
reduce unemployment rate in the related industries.

The third goal is boosting trade and investment, which

could offer lower costs, more efficient production and
stronger growth for all participating countries. For
China, the closer trade relationship with the countries
in the BRI is likely to open new markets for Chinese
goods. China might relocate its labour-intensive manu
facturing industries to countries with lower labour cost.
Further, most of the starting points of the BRI eco-
nomic corridors are located in less developed areas
in Western China, so active trade and investment ac-
tivities along these corridors could promote economic
growth in these under-developed areas.

THE BELT AND ROAD INITIATIVE: THE FIRST SEVEN YEARS 10

A CEIC Insights Thematic Report
 01 INTRODUCTION

China’s Foreign Trade, USD bn

2,487 2,499
2,342 2,273
2,209 2,263
2,098 2,136 2,078
2,049
1,898 1,950 1,959
1,818 1,844
1,743 1,680
1,578 1,588
1,396

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Total Exports Total Imports

Source: CEIC Data

China’s Outward Direct Investments, USD bn

196.1

158.3
145.7 143.0 136.9
123.1
107.8
87.8
68.8 74.7
55.9 56.5

21.2 26.5

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Source: CEIC Data, Ministry of Commerce of China

 2013 NOVEMBER
olicy Timelin President Xi Jinping
officially announces the
BRI, and subsequently the
Central Committee of the
Communist Party adopts
a resolution on the matter.
The Leading Group for
Promoting the BRI is
DECEMBER
The Silk Road Fund is
2014 established under the
jurisdiction of the National
established Development and Reform
Commission.

2015 DECEMBER
Asian Infrastructure
Investment Bank (AIIB), a
multilateral development
bank with a mission to
finance infrastructure
construction in Asia and
projects under the BRI, is
established

MARCH
The BRI is defined as a
2016
major objective in China’s
13th Five-Year plan.

2017 MAY
The First Belt and Road
Forum for International
Cooperation is held
in Beijing. After that,
many policy guidelines
and plans are released,
including ones for BRI
cooperation in the areas
APRIL
The second Belt and
2019 of maritime economy
(including transport,
Road Forum is held in fishing, oil and gas
Beijing and the report The extraction, scientific
Belt and Road Initiative research), agriculture,
Progress, Contributions environment, sports and
and Prospects was tourism.
published.
 02
Risks, Challenges
and Outlook

THE BELT AND ROAD INITIATIVE: THE FIRST SEVEN YEARS 14

A CEIC Insights Thematic Report
Despite the ambitious intentions along the BRI eco-
nomic corridors, there are four main risks for China
and the participating countries, connected to debt
sustainability, governance, environment and social
issues. The escalating geopolitical tensions are an-
other major challenge. Against this background, the
outlook for the BRI is full of difficulties in 2021 and
beyond. The COVID-19 pandemic made the outlook
even more vague. Hence, reforms are essential to in-
crease the transparency of the BRI projects, to estab-
lish a risk management system and to enhance the
policy coordination. China has also expressed inten-
tions to shift the focus of the BRI projects from infra-
structure projects to people-oriented projects such
as education, healthcare and culture related projects,
in a bid to alleviate the concerns over the BRI projects
and to build a better business environment.

The COVID-19 pandemic

made the outlook even
more vague. Hence, reforms
are essential to increase
the transparency of the BRI
projects
 Detailed data suggests that the concerns over debt sus-
Debt Sustainability tainability are understandable and reasonable. Hence,

Risks reforms are required to manage the investment risks

and debt sustainability risks before financing further
investments in the BRI. According to the World Bank’s
Debtor Reporting System, the Chinese loans to low-in-
Debt sustainability risk is considered the most signifi-
come-developing countries have fixed interest rates
cant for the countries participating in the BRI. Most of
with a median rate of 2%, a grace period of six years,
the projects are related to infrastructure investment that
and a maturity of 20 years. Such financing terms are not
involves large amounts of financing and consequently
the most favourable for the countries taking the loan.
might increase the debt-to-GDP ratio in the short run.
Second, the information on the investment and financ-
ing terms of the BRI projects is still not transparent Some recipient countries’
enough. About a third of Chinese loans are thought to
be collateralized, which could be associated with addi-
governments are not
tional risks, as the World Bank points out in its 2019 Belt efficient and consistent
and Road Economics report. Third, the BRI does not
have a published methodology for assessing econom-
enough in their economic
ic feasibility, meaning that it is hard to judge whether governance, which could
one particular investment project is feasible and sus-
tainable, when it comes to debt. Fourth, some recipient
lead to difficulties repaying
countries’ governments are not efficient and consistent back the debt
enough in their economic governance, which could
lead to difficulties repaying back the debt.

Debt sustainability risk is considered the most

significant for the countries participating in the BRI

THE BELT AND ROAD INITIATIVE: THE FIRST SEVEN YEARS 16

A CEIC Insights Thematic Report
 02 RISK, CHALLENGES AND OUTLOOK

The prospects of low

returns on the BRI
projects is a major risk for
China, which has a high
domestic debt

External Debt, % of nominal GDP, Selected Economies

Source: CEIC Data

The Hambantota port in Sri Lanka and the Djibouti port
in Djibouti are often used as examples of debt-trap di-
plomacy. According to an article named China’s Debt
Diplomacy published by Foreign Policy in April 2019,
Sri Lanka signed over to China a 99-year lease for the
use right of Hambantota and Djibouti became at high
risk of debt distress.
(317% of GDP in 13 2020 according to the Internation-
al Institute of Finance), with accumulated financial risk.
The uncertain returns and potential default risks in
the recipient economies could hurt China’s economy,
which grew by 6% in 2019, the slowest pace since the
1990s and, and later contracted in Q1 2020 by 6.8% y/y,
the first GDP drop in nearly three decades.

The prospects of low returns on the BRI projects is a

major risk for China, which has a high domestic debt

THE BELT AND ROAD INITIATIVE: THE FIRST SEVEN YEARS 17

A CEIC Insights Thematic Report
Governance risks
Since the government always plays a significant role in
infrastructure projects, these investments are likely to
be exposed to governance risk. In the process of pub-
lic procurement, there could be room for the abuse of
public office for private gain. According to the Transpar-
ency International 2011 Bribe Payers Index, perceptions
of bribery worldwide are higher in construction and in
public works than in other sectors. The latest Corrup-
tion Perception Index scores imply that the perceived
corruption in the economies along the BRI economic
corridors is higher than the average level.
Environmental Risks
The infrastructure projects in the BRI pose a wide
range of environmental risks, including potential pollu-
tion from topographical and hydrological damage, and
damage to biodiversity. Chinese companies indicated
that 10% of the overseas projects got cancelled due to
the huge environmental risks, according to a research
report on overseas social responsibility of central en-
terprises, released by the state-owned Assets Super-
vision and Administration Commission.
While it is difficult to measure the potential environ-
mental risk, there are two cases that illustrate this risk
well. A hydropower plant project, funded by China and
being constructed by state-owned Sinohydro, trig-
gered protests in the Indonesian island of Sumatra, as
it threatened the balance of the highly diverse Batang
Toru ecosystem, home to the endangered Tapanuli or-
angutans. In Myanmar, local fishing communities had
concerns that a dam project would disrupt fish migra-
tion. Ultimately, the dam project was suspended, while
the one in Sumatra is still under construction.
Social risks
The social risks refer to the local communities affected
by the BRI projects. Some of the BRI projects recruit
Chinese workers, which might cause a labour influx,
and this rapid migration might have negative impacts
on the local communities, especially if the communi-
ties are located in rural areas with limited goods and
services resources.
THE BELT AND ROAD INITIATIVE: THE FIRST SEVEN YEARS
A CEIC Insights Thematic Report
Geopolitical tensions
The governments of the countries along the BRI eco-
nomic corridors reacted differently to the launch of
the initiative and its development over time. Myanmar,
Mongolia and Pakistan, for instance, have a general-
ly more positive attitude, while the tensions between
China and India have a notable negative impact on the
development of the Bangladesh-China-India-Myan-
mar corridor. Consequently, the projects there were
focused in the countries other than India.
COVID-19
The COVID-19 pandemic and the subsequent eco-
nomic crisis challenges and opportunities to the BRI.
With countries shutting down their borders and limiting
international travels, some BRI infrastructure projects
might be affected. In addition, despite China’s contin-
ued recovery, its slowing economy might weaken its
ability to allocate funding for the BRI projects. In fact,
the Chinese government was already urged to re-eval-
uate the economic feasibility of the projects in the BRI.
According to the latest data released by China’s Min-
istry of Commerce, however, the BRI’s pace has not
been slowed down by the COVID-19 pandemic so far.
In the first eight months of 2020, Chinese companies
excluding financial institutions invested a total of USD
11.8bn in the 54 BRI nations with a growth rate of 31.5%
y/y. The COVID-19 pandemic has actually further en-
hanced regional cooperation under the BRI framework.
For example, ASEAN has replaced the EU to become
China’s biggest trading partner. In the first eight months
of 2020, China’s trade with the ASEAN countries grew
by 3.8% y/y and accounted for 14.6% of China’s total
trade volume. In H1 2020, China’s investment in ASE-
AN reached USD 6.23bn, growing by 53.1% y/y and ac-
counted for 76.7% of China’s total investment in the BRI
nations.
18

Upon its launch, the BRI prioritised hardware - the
building of infrastructure. In recent years, however, the
BRI has shifted to emphasize more on the software
connectivity - the cooperation in terms of healthcare,
education and business environment. The pandem-
ic might be an opportunity for China to speed up this
transition. In 2017, China proposed the Health Silk Road
concept to promote medical and healthcare cooper-
ation under the BRI. The pandemic could lead to in-
creased efforts towards strengthening the Health Silk
Road concept. China has also been promoting the
Digital Silk Road concept since 2015. As the pandemic
prompted speeding up of the digital economy domes-
tically, it could also help facilitate the digital economy
under the BRI. In fact, the theme for the China-ASEAN
Expo to be held in November 2020 is focused on build-
ing the Belt and Road and facilitating the cooperation
in e-commerce, technological innovation, 5G networks,
and smart cities.
02 RISK, CHALLENGES AND OUTLOOK
Outlook
Despite the bumpy road ahead, implementing re-
forms could improve the outlook for BRI in the long
run. The reforms need to be targeted towards re-
ducing debt sustainability and governance risks,
and managing environmental and social risks. De-
spite the fact that the geopolitical tensions could
not be solved by reforms, the reforms are likely to
improve the transparency of the BRI projects, which
might be helpful to alleviate the concerns.
The reforms of the BRI projects should also focus
on transparency, risk management and policy coor-
dination. In terms of transparency, the Chinese gov-
ernment needs to develop a comprehensive, Eng-
lish language BRI project database. Reforms could
help manage the investment risk mentioned above.
For China, the governance ability of the host coun-
tries should be evaluated before any investments.
In line with reducing environmental and social risks,
an overall assessment needs to be done for each
project to mitigate any adverse impact on local en-
vironment and communities.
 03
Economic
Corridors

THE BELT AND ROAD INITIATIVE: THE FIRST SEVEN YEARS 20

A CEIC Insights Thematic Report

Since the BRI is considered an open arrangement,
there is no official list of participating countries. That is
why there are three ways to define the scope of the ini-
tiative. The first one uses the Bilateral Investment Trea-
ty, which China has signed with 54 countries. China’s
Ministry of Commerce uses this information to gener-
ate and publish statistical data about the BRI.
The second way is geographical and defines all coun-
tries along one of the seven economic corridors of the
BRI as potential participants in the initiative.
The third way to define the scope of BRI is whether a
country or an organization has signed a cooperation
New Eurasia Land Bridge
China - Central Asia -
West Asia
21st Century Maritime Silk Road
Land Economic Corridors Maritime Economic Corridors
THE BELT AND ROAD INITIATIVE: THE FIRST SEVEN YEARS
A CEIC Insights Thematic Report
03 ECONOMIC CORRIDORS
agreement with China concerning BRI. As of Septem-
ber 2020 these included 138 countries and 30 interna-
tional organizations, according to the official BRI web-
site. Some of these countries are not located along the
BRI corridors, for instance, countries in Latin America
or in the non-coastal parts of Africa. And the other way
around – there are countries situated along the BRI
corridors that have not signed any collaboration agree-
ments with China. For the purposes of this report we
shall use the geographical method, as the analysis is
focused on the economic impact of the BRI rather than
on the political issues related to the initiative.
China - Mongolia - Russia
China - Pakistan
Bangladesh - China -
India - Myanmar
China - Indochina
21
 Source: CEIC Data, WHO

THE BELT AND ROAD INITIATIVE: THE FIRST SEVEN YEARS 22

A CEIC Insights Thematic Report

China – India – Bangladesh – Myanmar
As part of the BRI, the China-India-Bangladesh-Myan-
mar economic corridor is proposed to connect East-
ern Asia with South and Southeast Asia and the goal
is improved economic and cultural connectivity. The
five key partners of China along this corridor are Bang-
ladesh, India, Myanmar, Nepal, and Sri Lanka. These
five economies had a combined population of 1.6bn as
of 2019. In 2019, their total nominal GDP was approxi-
mately USD 3.2tn, or 22.3% of China’s nominal GDP.
The big market size of the countries along this corridor
is attractive for China and offers the opportunity to ex-
plore them as destinations for Chinese exports, espe-
cially against the background of the uncertain state of
trade ties with the US. The potential diversification of
Key Macroeconomic Indicators, 2019
Population, Nominal GDP,
mn USD bn
Bangladesh 165.6 302.6
India 1,341.0 2,713.2
Myanmar 54.0 68.7
Nepal 29.5 30.6
Sri Lanka 21.8 84.1
Source: World Bank, CEIC Data
The countries in this economic corridor, albeit devel-
oping and the majority of them considered lower-mid-
dle income economies, have an advantage compared
to China in terms of labour force growth. Between 2015
and 2019, China’s labour force declined by 0.07% on
average. By contrast, the growth rates in the countries
along the BCMI corridor were significantly higher. The
favourable labour market environment is attractive for
Chinese enterprises, which are facing challenges such
as rising labour costs and shortage of labour on the
THE BELT AND ROAD INITIATIVE: THE FIRST SEVEN YEARS
A CEIC Insights Thematic Report
03 ECONOMIC CORRIDORS
trade partners might help increase China’s resilience to
global market shocks.
As developing economies, these countries have higher
demand for infrastructure improvement and expan-
sion. The relatively high GDP growth rates could make
potential debt servicing more affordable. The improved
and expanded infrastructure could ultimately help
these economies attract more foreign direct invest-
ment (FDI). China, for its part, might benefit from the
demand for infrastructure by engaging in such projects
and thus, using its excess capacity in the construc-
tion-related industries. Moreover, China could offer
them telecommunication and financial infrastructure,
where it has comparative advantages.
Labour force annual
Real annual GDP
growth, 2015-2019 avg growth rate, 2015- Development Status
2019 avg
7.4 2.6 Lower-Middle Income
7.4 0.9 Lower-Middle Income
6.4 0.0 Lower-Middle Income
5.2 2.7 Low Income
3.7 1.2 Upper-Middle Income
domestic market. Hence, some labour-intensive indus-
tries might aspire to relocate their factories to countries
with abundant and cheap labour force. The recipient
countries, in turn, might benefit from the potential job
creation and reduced unemployment.
The aggregate trade turnover between China and
these countries stood at USD 117.8bn in 2019 which
is 2.6% of the China’s total trade turnover in the given
year. India’s trade with China was the highest in ab-
23
solute terms at USD 85.5bn in 2018, surpassing by far
Bangladesh with USD 13.9bn trade turnover. However,
when foreign trade is measured as a share of GDP, the
picture becomes very different. Myanmar’s trade with
China accounted for 17.7% of its nominal GDP in 2019.
By contrast, this share in India is a modest 3.2%. Chi-
na’s outward direct investments in 2019 stood at USD
136.9bn, experiencing a third consecutive annual de-
cline. In 2016 they reached a peak of USD 196.15bn and
followed a downward path afterwards.

Trade with China, 2019

90 20
80 18
70 16
60 14
12
50
USD bn

10

%
40
8
30 6
20 4
10 2
0 0
Bangladesh India Myanmar Nepal Sri Lanka

Total Trade Turnover, USD bn Trade Turnover, % of nominal GDP

Source: CEIC Data

Outward Direct Investment from China, Flow, USD mn

2013 2014 2015 2016 2017 2018

Bangladesh
Source: CEIC Data 41.4 25.0 31.2 40.8 99.0 543.7

India 148.6 317.2 705.3 92.9 290.0 206.2

Sri Lanka 71.8 85.1 17.5 -60.2 -25.3 7.8

Nepal 37.0 45.0 78.9 -48.8 7.6 51.2

Source: CEIC Data, Ministry of Commerce of China

In 2019, China engaged in several infrastructure pro-
jects along the China-India-Bangladesh-Myanmar
economic corridor and the value of these projects
amounted to USD 3tn, according to the Chinese com-
merce ministry’s projects database. The available in-
formation reveals that most of the projects are in Bang-
ladesh and the aggregated value of these projects was
USD 1.54tn. The value of the infrastructure projects in
India, Myanmar and Sri Lanka was USD 578mn, USD
463mn and USD 438mn, respectively. By industry, 64%
of the projects were related to the power generation
industry, 26% of them were in the transportation and
10% - in the agriculture industry.

THE BELT AND ROAD INITIATIVE: THE FIRST SEVEN YEARS 24

A CEIC Insights Thematic Report
 03 ECONOMIC CORRIDORS

Key Projects

Myanmar: Thilawa Shipyard Shariatpur and Madaripur, thus linking the southwest of
the country with the northern and eastern regions. The
The Thilawa Shipyard is part of Myanmar’s Yangon In-
construction began in November 2014 and is sched-
dustrial Zone, which is situated right next to the coun-
uled to be finalised in June 2021. As of 2019, 77% of the
try’s largest city – Yangon. In January 2020, Chinese
overall project have been completed, according to
President Xi Jinping paid an official visit to Myanmar
the official project website. This project is estimated to
and met with Myanmar’s State Counsellor Aung San
cost USD 2.97bn and is funded by the government of
Suu Kyi. The two countries signed over 30 agreements,
Bangladesh. The government signed the project con-
which would reportedly speed up a wide range of BRI
tract with China Communications Construction Limited
projects, including improving the regional connectiv-
Company, a state-owned infrastructure construction
ity and infrastructure. Although the agreements did
company with a reported total operating revenue of
not include any specific time frames or financial costs
RMB 492.5bn in 2018. Its subsidiary China Major Bridge
for the projects, the emphasis in Myanmar falls on the
Engineering is the construction company. The bridge
three pillars of the China-Myanmar Economic Corri-
will have a four-lane highway on the upper level and a
dor, as the Chinese state news agency Xinhua puts it
single track railway on the lower level. More than 80mn
– the construction of the Kyaukpyu Special Economic
people should benefit from the completed project be-
Zone with a deep-sea port and industrial park, the Chi-
cause it is supposed to improve the regional transpor-
na-Myanmar Border Economic Cooperation Zone and
tation network and boost regional economic activity.
the so-called Yangon New City. The Thilawa Shipyard
is an important part of this third pillar, because Yan-
gon, together with Kyaukpyu and the Chinese city of
Kunming in the Yunnan province are the three points of
the Y-shaped China-Myanmar Economic Corridor. Fur-
ther, this potential trade route might be an alternative
to the geopolitically sensitive Strait of Malacca. The
third phase of the shipyard is to be built by the Bei-
jing-based CAMC Engineering. The company is a sub-
sidiary of the state-owned China National Machinery
Industry Corp and signed the agreement for the Thila-
wa Shipyard expansion in September 2019. According
to GlobalData consultancy, CAMC Engineering’s port-
folio also includes projects in Belarus and Kyrgyzstan.
The company reported revenues of RMB 1.9bn in Q2
2020, 19.8% up compared to Q1 2020.

Bangladesh: Padma Bridge

Padma Bridge is a multipurpose 6.15 km road-rail
bridge across the Padma River to be constructed in
Bangladesh. When completed, it would be the largest
bridge in Bangladesh and the first fixed river crossing
for road traffic. It will connect the districts Munshiganj,

THE BELT AND ROAD INITIATIVE: THE FIRST SEVEN YEARS 25

A CEIC Insights Thematic Report
New Eurasian Land Bridge
The New Eurasian Land Bridge (NELB) economic
corridor is proposed to connect eastern China with
North-Western China and on to Europe. This economic
corridor is one of the most ambitious projects of the
BRI, because it includes developing rail transporta-
tion between China and Europe through Kazakhstan,
Russia and Belarus. There are many countries along
this economic corridor, including the UK, Italy, Luxem-
bourg, the Czech Republic, Hungary, Slovakia, Slove-
nia, Spain, Poland, Kazakhstan, Ukraine etc. The se-
lected economies for this analysis are Hungary, Italy,
Kazakhstan, Luxembourg and the UK.
This corridor has notable market potential due to the
156.6mn population and the aggregate nominal GDP
of USD 5.4tn as of 2019, which is 37.5% of China’s nomi-
nal GDP. The group of countries along this corridor is a
mix of high-income developed countries like Italy, Lux-
embourg and UK and upper-middle-income with high
GDP growth over the past few years like Kazakhstan
and Hungary.
Most of the countries along this corridor are consid-
ered developed economies, so the demand for infra-
structure is not high. However, some of the countries
have advantages in terms of technology and innova-
THE BELT AND ROAD INITIATIVE: THE FIRST SEVEN YEARS
A CEIC Insights Thematic Report
tion, with relatively low investment risk. The UK, for in-
stance, ranks fifth in the 2019 Global Innovation Index
(GII) published by World Intellectual Property Organ-
ization (WIPO) and this might be attractive for China,
which ranks 14th.
Moreover, high-developed countries included in this
economic corridor like the UK and Luxembourg have
well developed capital markets and are potential part-
ners for China in the financial industry Luxembourg, for
example, is an important destination for China to issue
offshore RMB-denominated bonds (the so-called Dim
Sum bonds) in Europe. In 2018, the Luxembourg Stock
Exchange became the global leading Dim Sum bond
listing location, overtaking Hong Kong SAR with a glob-
al market share of 26%, according to the public-private
agency Luxembourg for Finance.
On the other hand, developing countries like Kazakh-
stan and Ukraine are attractive for the Chinese inves-
tors due to their natural resources. Kazakhstan has
abundant crude oil and gas resources and its proven
crude oil reserves of 30bn bbl are the 11th biggest
worldwide. Consequently, Kazakhstan’s energy sector
has attracted many Chinese investments.
26
 03 ECONOMIC CORRIDORS

Key Macroeconomic Indicators, 2019

Real annual GDP growth,

Population, mn Nominal GDP, USD bn Development Status
2015-2019 avg

Hungary 9.8 157.9 4.1 High Income

Italy 60.6 2,084.4 1.0 High Income

Kazakhstan 18.4 179.3 3.0 Upper Middle Income

Luxembourg 0.6 70.9 3.2 High Income

United Kingdom 67.1 2,860.6 1.8 High Income

Source: World Bank, CEIC Data

Trade with China, 2019

100 9
90 8
80 7
70 6
60
5
USD bn

50

%
4
40
30 3
20 2
10 1
0 0
Hungary Italy Kazakhstan Luxembourg United Kingdom

Total Trade Turnover, USD bn Trade Turnover, % of nominal GDP

Source: CEIC Data, IMF

Outward Direct Investment from China, Flow, USD mn

2013 2014 2015 2016 2017 2018 2019

Hungary 25.7 34.0 23.2 57.5 65.6 95.0

Italy 31.3 113.0 91.0 633.4 424.5 297.6

Kazakhstan 811.5 -40.1 -2,510.3 487.7 2,070.5 118.4 790.0

Luxembourg 1,275.2 4,578.4 -11,453.2 1,601.9 1,353.4 2,487.3

United Kingdom 1,419.6 1,498.9 1,848.2 1,480.4 2,066.3 1,026.6 1,100.0

Source: CEIC Data, Ministry of Commerce of China

THE BELT AND ROAD INITIATIVE: THE FIRST SEVEN YEARS 27

A CEIC Insights Thematic Report
Key Projects

United Kingdom: Hinkley Point C
Nuclear Power Station
The Hinkley Point C Nuclear Power Station in Somer-
set, England, is the largest UK nuclear power project
in the past two decades, and it would potentially meet
7% of the UK’s power demand and contribute to the ef-
forts for reducing carbon emissions. In March 2013, the
state-owned China General Nuclear Group (CGN) be-
gan negotiations with the state-owned Electricite de
France (EDF) over joint nuclear projects, among which
the Hinkley plant. In October, 2015, the two compa-
nies reached an agreement, confirmed at a high-level
meeting by the Chinese President Xi Jinping and the
then British Prime Minister David Cameron. Hinkley
Point C is expected to become operational in 2023 and
is supposed to create more than 25,000 jobs. The deal
between CGN and EDF encompassed a wider part-
nership for developing new nuclear power stations at
Sizewell C and Bradwell B sites. Hinkley Point C Pro-
ject’s estimated costs are an ever rising figure, with
the latest estimate by EDF being USD 3.6bn. Moreover,
the French company warned of delays in the planned
completion. The CGN Group has further projects in
Romania, Malaysia, Namibia, South Korea and Singa-
pore. The company reported revenue of RMB 299mn
in 2017, which was 57% more than in 2016, according to
the EMIS company database.
Kazakhstan: Shymkent Oil Refinery
Due to its rich energy resources, Kazakhstan plays a
vital role along this corridor. The Kazakh government
struck 33 deals with China in 2015, including projects in
the steel, non-ferrous metals, sheet glass, oil refining,
hydropower and automotive industries. China is a key
investor in Kazakhstan’s energy sector and buys oil
and gas from the Central Asian country. In September
2019, after several protests against China’s influence in
Kazakhstan, the Kazakh government released details
on 55 projects with a total value of USD 27.6bn. Ac-
cording to the published information, the Shymkent oil
refinery project is the largest launched project, worth
USD 2.1bn. Essentially, the Chinese engagement in this
project consists of revamping the refinery, increasing
its capacity to 6mn tonnes per year and making it more
environmentally friendly. These operations are carried
out by PetroKazakhstan Oil Products, a joint venture
of the state-owned KazMunaiGas and China Nation-
al Petroleum. China National Petroleum Corporation
reported revenue of RMB 2.2bn in 2018, a significant
increase by 108% compared to 2017.
Kazakhstan: Khorgos Gateway
The Khorgos Gateway, located on the Kazakh side on
the Kazakhstan-China border, is a strategic project
for the BRI. It is supposed to serve as a logistics hub,
special economic zone and to essentially become a
crucial connecting point between the East and the
West. The ambitious project envisages turning Khor-
gos Gateway, which is located near the Eurasian pole
of inaccessibility or the point in Eurasia furthest from
any sea, into the world’s largest dry port. Khorgos
Gateway lies on the 12,000-km railway connecting the
city of Yiwu, in the Eastern Chinese province of Zhe-
jiang, and London. This railway link might prove cru-
cial, especially once the UK leaves the EU and might
want to strengthen ties with the East. The Khorgos hub
construction was funded by the Kazakh government,
with no loans from China, and the authorities still have
the majority stake. COSCO Shipping owns 49%, and
the Dubai-based company DB World operates the
Khorgos Special Economic Zone. While this project
is indeed promising and could contribute to reaching
the goals of the BRI, Khorgos Gateway faces a curious
drawback, namely the wider track gauge that Kazakh-
stan, a former Soviet republic, uses. This means that
cargo trains crossing from China will have to change
wagons when entering Kazakhstan and later on the
Belarussian-Polish border.

THE BELT AND ROAD INITIATIVE: THE FIRST SEVEN YEARS 28

A CEIC Insights Thematic Report
 03 ECONOMIC CORRIDORS

China – Mongolia – Russia

This economic corridor is supposed to connect North-
ern China, Mongolia and Russia through projects fo-
cused mainly on transport infrastructure and gas pipe-
lines. The five key partners of China along this corridor
are Belarus, Estonia, Lithuania, Mongolia and Russia. Russia
With population of almost 150mn people Russia stands
out, observing the key indicators, reflecting the rela-
tionship with China. The trade turnover between the
Mongolia
two countries was worth USD 110.9bn in 2019. Mongo-
lia is also worth noting, again because of the trade, but
China
more specifically, because the trade turnover with Chi-
na was 62.9% of its nominal GDP in 2019. In terms of the
outward direct investments from China, in Mongolia net
outflows are observed in 2015, 2017 and 2018. Chinese
direct investments in Russia, on the other hand, follow
volatile pattern, which since 2015 is also a downward
one.

Key Macroeconomic Indicators, 2019

Real annual GDP growth,

Population, mn Nominal GDP, USD bn Development Status
2015-2019 avg

Belarus 9.4 63.1 0.1 Upper-middle Income

Estonia 1.3 31.5 4.0 High Income

Lithuania 2.8 54.2 3.3 High Income

Mongolia 3.3 14.0 4.3 Lower-middle Income

Russia 146.7 1,699.9 0.8 Upper-middle Income

Source: World Bank, CEIC Data

THE BELT AND ROAD INITIATIVE: THE FIRST SEVEN YEARS 29

A CEIC Insights Thematic Report
Trade with China, 2019

120 70

100 60
50
80
40
USD bn

60

%
30
40
20
20 10
0 0
Belarus Estonia Lithuania Mongolia Russia

Total Trade Turnover, USD bn Trade Turnover, % of nominal GDP

Source: CEIC Data

Outward Direct Investment from China, Flow, USD mn

2013 2014 2015 2016 2017 2018

Belarus 27.2 63.7 54.2 160.9 142.7 67.7

Estonia 0.1 53.2

Lithuania 5.5 2.3 -4.5

Mongolia 388.8 502.6 -23.2 79.1 -27.9 -457.1

Russia 1,022.3 633.6 2,960.9 1,293.1 1,548.4 725.2

Source: CEIC Data, Ministry of Commerce of China


Key Projects
Russia: Power of Siberia Gas Pipeline
The Power of Siberia gas pipeline, which connects the
Chayandinskoye oil field with China, is part of a larg-
er China-Russia energy deal worth USD 400bn and
signed in May 2014. The construction of the pipeline,
which has an annual capacity of 38bn m3, started later
in 2014 and took four years – up until December 2019,
when it was inaugurated and started delivering gas to
China. The project uses entirely Russian design, tech-
nologies and systems. The pipeline will contribute to
China’s energy diversification efforts, while for Russia it
means widening the partnership with China. China still
has room for natural gas consumption to grow, as the
clean energy makes up about 8% of the country’s pri-
mary energy consumption, while in many developed
countries the figure is above 20%.
Belarus: China-Belarus Great Stone
Industrial Park
One of the flagship projects along this corridor, the
Great Stone industrial park is situated near the Bela-
rusian capital Minsk, close to the international airport.
The park is a special economic zone established under
a 2010 intergovernmental agreement between China
and Belarus. After the launch of the BRI in 2013, the
development of the project picked up pace. Accord-
ing to the 2010 agreement, the Great Stone Industri-
03 ECONOMIC CORRIDORS
al Park is set up as an innovation centre for high-tech
manufacturing in mechanical engineering, electron-
ics & telecommunication, chemistry, biotechnology,
pharmaceuticals, new materials, logistics, e-com-
merce and big data processing & storage. As of March
2020, there are 60 companies from 15 countries, with
33 from China, 12 from Belarus and the remaining 15
from Austria, Germany, Israel, Canada, Cyprus, Latvia,
Lithuania, Russia, the US, Switzerland, and Estonia.
These 60 companies are registered as Great Stone In-
dustrial Park residents, and among them are Huawei,
China Merchants Group, China Electronics Technolo-
gy Group Corporation, China Aerospace Science and
Technology Corporation. As of December 2019, a total
of USD 526mn were invested in the park, according
to the Belarusian news agency. The park is expected
to host at least 80 resident companies and a total of
3,000 employees. An ambitious pilot project for the
development of 5G technology is also on the agenda,
with state-owned Beltelecom pledging to provide all
kinds of assistance to Huawei in its efforts to devel-
op 5G technologies in the Great Stone Industrial Park.
According to a 2018 EBRD report, the park still faces
challenges, arising from the lack of experience in new
development concepts both in Belarus and in China.
Moreover, the industrial basis in Belarus is weak, the
domestic market is small, and the park itself depends
on Chinese financial institutions.
China – Central Asia – West Asia
Economic Corridor
The China-Central Asia-West Asia economic corridor
is intended to connect Western China, Xinjiang Prov-
ince, and the Central Asian countries of Kazakhstan,
Kyrgyzstan, Uzbekistan, Tajikistan, Turkmenistan, as
well as Iran and Turkey. Transportation infrastructure
and energy are the key areas of cooperation and the
main players along this corridor are Turkey, Saudi Ara-
bia, UAE, Israel and Qatar.
The aggregate nominal GDP of the five key countries
was USD 2.55tn in 2019, which is 17.8% of China’s nomi-
nal GDP. The population of the five countries is 138.9mn
people. Most of the key countries along this corridor
are producers and exporters of oil and natural gas,
hence their growth rates tend to be volatile and de-
pendent on the global oil prices. Israel is a valuable
innovation and high-tech hub and this makes it very
attractive for Chinese investments. Many Chinese IT
companies like Alibaba, Baidu and Tencent are eyeing
Israeli innovation technologies and start-ups, Chinese
ambassador to Israel Zhan Yongxin said as quoted by
the Jerusalem Post.

Key Macroeconomic Indicators, 2019

Real annual GDP growth,

Population, mn Nominal GDP, USD bn Development Status
2015-2019 avg

Turkey 83.2 760.5 3.3 Upper-middle Income

Israel 9.1 394.9 1.7 High Income

Qatar 2.6 183.2 1.6 High Income

Saudi Arabia 34.2 793.0 2.7 High Income

United Arab
9.8 421.1 4.2 High Income
Emirates

Source: World Bank, CEIC Data

Trade with China, 2019

80 12
70
10
60
8
50
USD bn

40 6
%

30
4
20
2
10
0 0
Turkey Israel Qatar Saudi Arabia United Arab Emirates*

Total Trade Turnover, USD bn Trade Turnover, % of nominal GDP

*Data for 2018

Source: CEIC Data

THE BELT AND ROAD INITIATIVE: THE FIRST SEVEN YEARS 32

A CEIC Insights Thematic Report
 03 ECONOMIC CORRIDORS

Outward Direct Investment from China, Flow, USD mn

2013 2014 2015 2016 2017 2018

Turkey 178.6 105.0 628.3 -96.1 190.9 352.8

United Arab
294.6 705.3 1,268.7 -391.4 661.2 1,081.0
Emirates

Saudi Arabia 478.8 184.3 404.8 23.9 -345.2 383.1

Qatar 87.5 35.8 140.9 96.1 -26.6 -368.1

Israel 1.9 52.6 229.7 1,841.3 147.4 410.6

Source: CEIC Data, Ministry of Commerce of China

Key Projects

Turkey: Emba Hunutlu Thermal Plant
The Emba Hunutlu coal fired power plant is a flagship
BRI project and the largest Chinese direct investment
in Turkey, worth USD 1.7bn. It is located in the South-
ern-Central province of Adana. It is currently being
built by EMBA Electricity Production, a joint venture
between Shanghai Electric Power, AVIC-INTL Project
Engineering Company and two local Turkish investors.
EMBA was granted a 49-year generation licence for
Hunutlu by the Turkish Energy Market Regulatory Au-
thority.
The power plant is expected to have a total installed
capacity of 1,320 MW, or 3% of Turkey’s installed ca-
pacity, after its planned completion in 2022, according
to Xinhua. The project is funded by syndicated loans
from the China Development Bank, the Industrial and
Commercial Bank of China and the Bank of China. The
Turkish authorities plan to establish exclusive special
industrial zones for Chinese investors.
Israel: Tel Aviv Light Rail
The Tel Aviv light rail project is one of the largest
government-funded infrastructure projects in Israel.
It will serve as a mass transit system for the Tel Aviv
metropolitan area and includes several lines, with to-
tal length of 220 km. It is estimated that the average
daily passenger flow in 2030 will be 1.42mn people. In
May 2015, the Tel Aviv Metropolitan Mass Transit Sys-
tem signed the contract for the construction of one of
the lines – the so called Red Line – with China Railway
Tunnel Group, a subsidiary of the state-owned China
Railway Cooperation, with a reported revenue of USD
5.37bn in 2018. The Red Line will be 23 km long, tech-
nically difficult and complicated to build. This project
is fully funded by the Israeli government with a total
amount of USD 815.7mn. In April 2019, the West seg-
ment of the red line project was finished, according to
the official website of China Railway Group.

THE BELT AND ROAD INITIATIVE: THE FIRST SEVEN YEARS 33

A CEIC Insights Thematic Report
China – Indochina Peninsula

The China – Indochina Peninsula economic corridor is
supposed to connect eight major cities — Singapore,
Kuala Lumpur, Bangkok, Phnom Penh, Ho Chi Minh
City, Vientiane, Hanoi and the Chinese city of Nan-
ning. Essentially, this corridor connects China and the
ASEAN region, whose members enjoy relatively high
economic growth rates. China’s key partners along this
corridor are Cambodia, Laos, Malaysia, Thailand, Phil-
ippines, Singapore and Vietnam.
Singapore is the only market classified as a high-in-
come country by the World Bank. The lower-mid-
dle-income economies have an advantage compared
to China regarding labour force, because of the higher
labour force growth rate and the lower labour costs.
The favourable labour market environment is attractive
for Chinese enterprises, which are facing challenges
such as rising labour costs and shortage of less qual-
ified labour on the domestic market. Hence, some la-
bour-intensive industries might aspire to relocate their
factories to countries with abundant and cheap labour
force. The recipient countries, on the other hand, might
benefit from the potential job creation and reduced un-
employment.

Key Macroeconomic Indicators, 2019

Labour force annual

Population, Nominal GDP, Real annual GDP
mn USD bn growth, 2015-2019 avg growth rate, 2015- Development Status
2019 avg

Cambodia 16.5 27.0 7.1 1.4 Lower-middle Income

Laos* 7.0 18.1 6.9 2.2 Lower-middle Income

Malaysia 32.6 364.8 4.9 2.3 Upper-middle Income

Singapore 5.7 372.2 2.9 1.3 High Income

Vietnam 96.5 261.9 6.8 1.0 Lower-middle Income

Thailand 66.6 506.6 3.4 0.0 Upper-middle Income

Philippines 108.1 346.8 6.6 1.1 Lower-middle Income

*Data up until 2018

Source: World Bank, CEIC Data
 03 ECONOMIC CORRIDORS

Trade with China, 2019

Source: CEIC Data

Outward Direct Investment from China, Flow, USD mn

2013 2014 2015 2016 2017 2018 2019

Cambodia 499.3 438.3 419.7 625.7 744.2 778.3 750.0

Laos 781.5 1,026.9 517.2 327.6 1,220.0 1,241.8 1,150.0

Malaysia 616.4 521.3 488.9 1,830.0 1,722.1 1,662.7 1,110.0

Singapore 2,032.7 2,813.6 10,452.5 3,171.9 6,319.9 6,411.3 4,830.0

Vietnam 480.5 332.9 560.2 1,279.0 764.4 1,150.8 1,650.0

Thailand 755.2 839.5 407.2 1,121.7 1,057.6 737.3 1,370.0

Philippines 54.4 225.0 -27.6 32.2 108.8 58.8

Source: CEIC Data, Ministry of Commerce of China

Key Projects
Malaysia: East Coast Rail Link
When launched in 2017, the East Coast Rail Link in
Malaysia was expected to become a project, demon-
strating the close ties between Malaysia and China.
However, in July 2018 it was suspended due to Malay-
sia’s fiscal issues, only to be resumed in July 2019. The
East Coast Rail Link is a project for a 640-km electric
rail line across Peninsular Malaysia connecting port
Klang on the West coast with the city of Kota Bharu
in Northeast peninsular Malaysia. The state-owned
China Communication Construction Company (CCCC)
is building the railway, which is expected to be com-
pleted by December 2026. Different companies will be
engaged in the project - the Malaysian HSS Engineers
will provide the preliminary design consultations, and
the US-based AECOM will supervise the construction
of stations, viaducts, tunnels etc. Around 85% of the
costs will be financed with a loan from the Export-Im-
port Bank of China. The project costs are estimated at
USD 14.6bn and it is supposed to improve connectivity
between the East and the West coasts, to lower trans-
port costs, and to make the less-developed East coast
areas more attractive for business and tourism.
THE BELT AND ROAD INITIATIVE: THE FIRST SEVEN YEARS
A CEIC Insights Thematic Report
Laos: Boten-Vientiane Railway
The Boten-Vientiane Railway project is an integral part
of the China-Laos Railway, connecting Kunming, the
capital city of China’s Yunnan province with Vientiane,
the capital city of Laos. When the China-Laos Railway
is finished, it could be extended to Bangkok, Thailand,
further to Kuala Lumpur, Malaysia, and eventually to
Singapore. Hence, the Boten-Vientiane Railway pro-
ject is of essential importance, potentially providing a
vital link between China and South Asia. The company
in charge of the construction and the operation of the
USD 6bn project is the Laos-China Railway Co. joint
venture. The 414-km railway is scheduled to be com-
pleted by the end of 2021. From China’s perspective, the
Boten-Vientiane Railway is a crucial part of the Trans-
Asian Railway that could enhance the infrastructure
connectivity of the BRI countries and strengthen the
cooperation between China and ASEAN. Laos-China
Railway Co. has cooperation agreements with 20 Lao
firms on this project, which potentially means that its
execution and subsequently operation could create
jobs and improve the transportation of goods and
people. It is vital for the development of the Saysettha
Development Zone, a special economic zone close
to the capital Vientiane, which is also a joint project
between China and Laos. It is intended to attract 150
companies in industries including agriculture, machin-
ery manufacturing and logistics by the end of 2030.
36
China - Pakistan
The China - Pakistan economic corridor is a key pas-
sageway connecting the China-Central Asia-West Asia
Economic Corridor in the North with the 21st Century
Maritime Silk Road in the South, by connecting China’s
Xinjiang province and Pakistan’s Khyber Pakhtunkhwa
and Balochistan provinces. Hence, the analysis focuses
solely on Pakistan, with population over 210mn people.
In April 2015 Pakistan and China signed an agreement
on a wide range of projects with a total value of USD
46bn, roughly 20% of Pakistan’s annual GDP. A vast
network of highways and railways are to be built along
this economic corridor that are supposed to pave the
Pakistan’s real GDP growth rate experienced six years
of consecutive acceleration from 2013 to 2018. Eventu-
ally it slowed down to 3.3% y/y in 2019 from 5.8% y/y in
the previous year (Chart 15). The slowdown was mainly
caused by the deceleration in agriculture due to wa-
ter supply shortages. Moreover, the slowing economy
raised concerns about Pakistan’s potential debt-sus-
tainability problems, as Pakistan’s external debt in-
creased to USD 111bn, equal to 38% of nominal GDP
in 2019.
Pakistan’s GDP and Labour Force Growth Rates, %

way for more efficient transportation, linking seaports

in Gwadar and Karachi to Northern Pakistan, as well as
points further north in Western China and Central Asia,
according to a report of AsiaNet-Pakistan. The projects 5.8
5.5 5.6
face many challenges ahead, including terrorism risk,
4.7 4.7
energy shortages and weak infrastructure. 4.4

This economic corridor has been considered a corner- 3.4

3.1 3.0 2.9 2.8
stone of Pakistan’s foreign and domestic policy since 2.2
2.0
2015. In December 2019, Pakistan’s prime minister Imran
Khan reaffirmed the strategic partnership between Pa- 1.0

kistan and China and expressed resolve to strengthen

2013 2014 2015 2016 2017 2018 2019
bilateral relations in the political and economic areas.
According to the London School of Economics’ South
Labour Force Growth Real GDP Growth
Asia Center, while the projects might contribute to the
essential infrastructure development in Pakistan, they
might also take a huge toll on its economy. Source: CEIC Data, World Bank

THE BELT AND ROAD INITIATIVE: THE FIRST SEVEN YEARS 37

A CEIC Insights Thematic Report
 03 ASEAN

Trade with China, 2019

11.9

10.0

4.3

1.9

Imports from China, USD bn Exports to China, USD bn Total Trade Turnover, USD bn Trade Turnover, % of nominal GDP

Source: CEIC Data

Outward Direct Investment from China, USD mn

1,014.3

678.2
632.9

320.7

163.6

-198.7

2013 2014 2015 2016 2017 2018

Source: CEIC Data, Ministry of Commerce of China

 03 ECONOMIC CORRIDORS

Key Projects

Sahiwal Coal Power Plant
Pakistan’s economy is facing an energy shortfall of
4,500 MW and finding a solution to this major challenge
is vital for the development of other industrial activities.
Energy projects with a total value of USD 5.8bn are the
early harvest projects along this economic corridor.
The Sahiwal Coal Power Plant Project was launched in
2014. The 1,320 MW USD 1.8bn plant located in central
Punjab was built by the Chinese Huaneng Shandong
Company and Shandong Ruyi Science & Technology
Group and has been fully operational since July 2017.
Pakistan purchases electricity from the consortium at a
tariff of USD 0.0836 per kWh. The Chinese companies
covered 20% of the project costs (USD 356.4mn), while
the remaining 80% (USD 1.43bn) was financed through
a loan from the Industrial and Commercial Bank of Chi-
na, AsiaNet-Pakistan reported.

Karot Hydropower Dam
The Karot Hydropower Dam is located in Punjab, Pa-
kistan’s most populous province. This project is being
developed by Karot Power Company, a joint venture
between Three Gorges South Asia Investment Com-
pany and Associated Technologies of Pakistan. The
Chinese company is a subsidiary of China Yangtze Riv-
er Three Gorges Group. It operates the Three Gorges
Dam in China’s Hubei Province, which is one of the larg-
est hydropower projects in the world.

The Karot Hydropower Project includes a 95.5-me-

tre-high dam, a surface powerhouse, four headrace
tunnels, a spillway and a 5-km 500-kV transmission
interconnection to the national grid. The construction
started in 2015. The project is expected to be complet-
ed by the end of 2021 and have an installed capacity of
720 MW.

The total project cost is estimated at USD 2bn and is

funded with 20% equity and 80% loan. The debt financ-
ing for the project is provided by China Development
Bank, Industrial and Commercial Bank of China, Silk
Road Fund and the International Finance Corporation,
a member of the World Bank Group.

THE BELT AND ROAD INITIATIVE: THE FIRST SEVEN YEARS 39

A CEIC Insights Thematic Report
21st Century Maritime
Silk Road
The 21st Century Maritime Silk Road’s goal is to boost
infrastructure connectivity throughout Southeast Asia,
Oceania, the Indian Ocean, and East Africa. The coun-
tries actively participating in projects along this road
are Indonesia, Kenya, Egypt, the Republic of Con-
go and Greece. In terms of development status, only
Greece classifies as a high-income country, while the
rest are considered lower-middle-income economies
by the World Bank.

Key Macroeconomic Indicators, 2019

Real annual GDP

Population, Nominal GDP,
mn USD bn growth, 2015-2019 Development Status
avg

Indonesia 264.2* 1,119,2 5,0 Lower-middle Income

Greece 10.5 209,8 0,9 High Income

Egypt 98.9 302,3 3,9 Lower-middle Income

Kenya 47.6 95,5 5,6 Lower-middle Income

Republic of Congo 5.2 10,8 -0,3 Lower-middle Income

*Data up until 2018

Source: World Bank, CEIC Data

Trade with China, 2019

80 35
70 30
60 25
50
20
USD bn

40
%

15
30
20 10
10 5
0 0
Indonesia Greece Egypt* Kenya Republic of Congo

Total Trade Turnover, USD bn Trade Turnover, % of nominal GDP

Source: CEIC Data

THE BELT AND ROAD INITIATIVE: THE FIRST SEVEN YEARS 40

A CEIC Insights Thematic Report
 03 ECONOMIC CORRIDORS

Outward Direct Investment from China, USD mn

2013 2014 2015 2016 2017 2018 2019

Kenya 230.5 278.4 281.8 29.7 410.1 232.0

Republic of Congo 109.9 238.6 150.1 49.1 284.2 -292.6 930.0

Egypt 23.2 162.9 80.8 119.8 92.8 222.0

Indonesia 1,563.4 1,272.0 1,450.6 1,460.9 1,682.2 1,864.8 2,220.0

Greece 1.9 -1.4 29.4 28.6 60.3

Source: CEIC Data, Ministry of Commerce of China

Key Projects

Greece: Piraeus Port Kenya: Madaraka Express Railway

Piraeus port is the chief port of Athens, Greece, the
largest in the country and one of the largest in Europe.
In the midst of the debt crisis in Greece in 2009, the
Greek government decided to privatise the port of Pi-
raeus. In October 2009, Greece leased docks 2 and 3
to the China Ocean Shipping Company (COSCO) for
35 years. The following seven years were marked by
instability in Greece, which influenced the potential
partnership with China, but ultimately, in 2016 COSCO
reached a deal to purchase 67% of the shares of Pi-
raeus port in two stages. COSCO worked towards re-
vamping and upgrading the Piraeus facilities, increas-
ing the port’s capacity, turnover and annual container
throughput. In 2018, the port’s container throughput in-
creased to 4.9mn TEU and its global ranking according
to the Lloyd’s List rose significantly to 32nd from 93rd in
2010, the China Daily reported.
This 480-km railway is one of the biggest investment
projects along the BRI. It links Kenya’s capital Nairobi
with the port city of Mombasa on the Indian Ocean.
Hence, it could serve as a gateway to East Africa for
Chinese trade. The railway named Madaraka Express
is Kenya’s biggest infrastructure project since its inde-
pendence in 1964.
In 2013, the state-owned China Road and Bridge Engi-
neering Co Ltd, started the construction of the railway
and four years later it was completed. Passenger trains
on Madaraka Express travel at a speed of 120 km/h,
and freight trains run at a speed of 80 km/h. The pro-
ject cost USD 3.8bn, higher than the originally estimat-
ed USD 3.3bn. Once again, the ever rising cost of this
BRI project was a cause for alarm among some ob-
servers. The China Export and Import Bank funded 90%
of the cost through a loan, while Kenya’s government
provided the remaining 10%. China Road and Bridge
Engineering has the right to operate the Madaraka Ex-
press until 2022. After that, Kenya’s government will be
in charge. The railway essentially reduces the average
travel time from Nairobi to Mombasa from 10 to 4 hours
and could potentially support trade and tourism.

THE BELT AND ROAD INITIATIVE: THE FIRST SEVEN YEARS 41

A CEIC Insights Thematic Report
THE BELT AND ROAD INITIATIVE: THE FIRST SEVEN YEARS 42
A CEIC Insights Thematic Report
ABOUT CEIC DATA
CEIC is an ISI Emerging Markets Group Company
specialized in high quality macroeconomic data-
bases. CEIC’s databases have earned a world-class
reputation among financial institutions, government
agencies, universities, and corporations due to
accuracy and comprehensiveness. Today, we are
the service of choice for economic research on
emerging and developed markets by economists
around the globe.

CEIC INSIGHTS
CEIC Insights is a unit of CEIC Data that produces
proprietary research and analysis. The service
features data templates with dynamic visuals for
Emerging and Developed markets, providing instant
insight from macro overviews to individual sector
analysis.

THE BELT AND ROAD INITIATIVE: THE FIRST SEVEN YEARS 43

A CEIC Insights Thematic Report
 The CEIC Leading Indicator
An early warning system for key economies

REGISTER HERE

ASIA EUROPE NORTH AMERICA

OFFICE OFFICE OFFICE

15/F, V-Point, 18 Tang Lung 14 New Street 12 E. 49th St, 8 FloorNew

Street, Causeway Bay London EC2M 4HE York, NY 10017
Hong Kong, SAR of P.R. UK US
China

Voice: +852 5801 4141 Voice: +44 (0)208 132 4205 Voice: +1 212 610 2900
nainfo@isimarkets.com euinfo@isimarkets.com usinfo@isimarkets.com

THE BELT AND ROAD INITIATIVE: THE FIRST SEVEN YEARS 44

A CEIC Insights Thematic Report
Copyright © 2020 CEIC, all rights reserved.