Following the successful Belt and Road (BRI) conference in Beijing on 6th June 2017 it was interesting to read that China views regime change as being the biggest threat to BRI's long term success. After attending the conference held at the exclusive Dianyutai Villa complex in East Beijing, close to my university in Haidian where I studied Mandarin, the energy surrounding this international trade initiative was something that UK industry should not be ignorant of. With over 2,000 delegates attending from around the world, discussion topics ranged from manufacturing to finance, healthcare to finance. As usual there was limited UK representation however a few hedge funds and asset managers including Aberdeen Asset Management were in attendance.
How can UK participate in Belt and Road Initiative?
The UK is like a bookend on a shelf of trade, with China at the other end. When the BRI, previously known as the One Belt One Road Initiative, was launched by President Xi in 2013 we wondered how the UK could participate when we were so far from China. Initial thoughts were that the UK's leading finance and insurance sectors would be the only beneficiaries however this view is changing rapidly. With economic value being passed along the land route through ASEAN, 'stans and Europe there are becoming more opportunities for UK manufacturing to participate. At the conference on 6th June there were no UK manufacturing firms present nor official UK Government representatives (I wonder where our investment is going in this area?) so it was down to the China Investors Club to promote UK interests in manufacturing and healthcare. Yet the respect the BRI has for UK quality means that any UK firm attending would gain instant credibility and business opportunities. Given Brexit and the absence of clear political leadership in the UK, BRI gives us a ready made distribution channel that UK plc could back into with minimal cost.
BRI risks
I have always viewed the BRI as having one key vulnerability. As in any logistical chain, one break can cause the whole process to fail. I commented on this issue in my last article as to whether China will need to build a BRI security force to keep the economic road open. Well this point has now been started to be discussed in The Chinese media. Zhao Weiming, professor in Middle East studies at Shanghai International Studies University stated in an interview with Global Times newspaper that "challenge lies in whether a regime transfer would affect the next administration's decision to uphold the policies". This comment was with regards to Kazakhstan but could equally apply to many of the countries crossed by the BRI. When I raised this issue over the last few days in China with local business leaders and government officials, they felt this risk had been minimised through the use of multiple land routes from China to UK. A fair point but one still worth monitoring. Maybe those reading this article from the insurance sector could comment on how they view risk of consignment loss alone the BRI?
Despite the UK's June 2017 election result, our own 'regime change' is unlikely to impact our place on the BRI. So UK firms should be encouraged to reach out to China and find new markets and partners to expand available markets. The China Investors Club has never been busier helping UK firms go to China so if you want to join this growing trend, get in touch.
