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KONSUN will attend Belt and Roads Strategy development process next 10 years

Date:2017-11-05 10:11:41

When the Belt and Road (B&R) initiative was first announced by President Xi of China in late 2013, few could have envisaged the grandeur and ambition that it would entail. It has since generated considerable discussion and speculation about its specifics, such as what constitutes a B&R project, if there are commercial opportunities present and what the chances of success are.

                  

Kept broad and inclusive by the Chinese government, the B&R strategy has transcended many of its initial impressions and has proven to be much more. For example, there is a focus on developing bankable infrastructure projects supported by large international agencies, which infers that the B&R goes beyond just geopolitics and embraces the promotion of commercial interests, trade, culture and integration.

More than just a road

Even though the B&R’s initial objective was to rebuild the ancient land network that connects China to Europe via Central Asia, it has subsequently gone beyond that to include building highways, railways, ports, airports and now even establishing a maritime route that cuts through from China to South-East Asia, South Asia, the Middle East, and eastern Africa. These activities are mainly focused along six economic corridors, which cuts across over 65 developing countries and is expected to be a catalyst for infrastructure development that will have an impact on a population of about 4.4 billion and one third of the global economy.

The Belt and Road also encompasses the development of an infrastructure ecosystem ranging from power generation and utilities infrastructure, oil and gas pipelines, to telecommunications transmission cables in a massive global connectivity plan. Even as its current focus is on outbound infrastructure development and trade enhancement, there are expected further activities in subsequent phases, which embrace social infrastructure such as education and healthcare, media, software and innovation as well as more focus on cultural and people-to-people exchanges, some of which are already underway. B&R also focuses on industrial and resource cooperation to drive trade and with this in mind, 70 cooperative zones have already been established.

Milestone achievements

The objectives of the B&R initiative includes other strategic goals such as establishing global recognition in developing complex transnational infrastructure projects. The B&R is also clearly an important part of China’s ongoing national reform agenda, building on the “Go Out” policy launched in the 1990’s, and complements the current 13th Five-Year plan and the Made in China 2025 strategy. These outbound investments also further support the internationalization of China’s renminbi currency, which helps diversify currency risks.

Since its announcement in 2013, there have been a number of key milestone achievements, including the first China-UK transnational freight train, which completed its 12,450km journey (through seven other countries in just 18 days) earlier in January this year. Also, the Jakarta-Bandung high speed rail project, for which the construction contract was signed in April 2017, is another flagship B&R project which fully adopts Chinese railway technological standards.

The need for Sino-foreign partnerships

The B&R initiative is such a massive undertaking that even China with all its resources, people and financing has sought partnerships with foreign companies. These partnerships can prove to be beneficial for China and foreign companies in many ways.

Gaining knowledge through foreign partnerships can help Chinese enterprises further develop expertise, and enable them to enhance global credibility in the infrastructure sector. For foreign companies, a collaboration with Chinese companies in infrastructure projects in third party countries can help open up access to its large domestic market. Furthermore, foreign companies can partake as a private investor in projects that are risk-guaranteed by Chinese institutions, with an improved risk-return ratio.

Successful partnership examples already exist, wherein foreign multinationals have become established equipment suppliers to Chinese engineering, procurement and construction (EPC) companies and have thereby benefited from a boost in orders both in third party markets as well as in China.