Belt & Road China Connectivity Index
To understand the extent of a project, concrete data is necessary: the success of the Belt and Road Initiative through the 'Belt & Road China Connectivity Index'.
Properly contextualised and analyzed data is an essential tool to understand the success of a project like the Belt and Road Initiative. For this purpose, ICBC Standard Bank, one of the largest credit institutions in the country, made a special index called 'Belt & Road China Connectivity Index', presented at the Convention co-organized by Easternational in Genoa on January 24th.
The index analyzes three dimensions and ten pillars. Trade, which includes exports of raw materials, non-raw materials, services and supply chains; Capitals, ie direct investments, portfolio investments and official financing; People, including Chinese workers in the BRI, foreign workers working in projects related to the BRI in China and social interactions.
The data presented by Jinny Yan, Chief China Economist and China Market Strategist - ICBC - not only is very positive, with a 60% growth of the Index itself from 2005 to 2015, but also shows other interesting information: for example, the geographical distance from China, although still fundamental, has become less important.
In 2009 about 50% of the change in the index was determined by proximity to Beijing, but now the amount has been reduced to one third. It is no coincidence that among the ten countries with the highest growth rate within the index only one, Laos, borders with China. The Maldives, Montenegro, Slovak Republic, Armenia, Czech Republic, Poland, Qatar, Georgia and Serbia (in order of growth) are far from the East, yet they enjoy the effect of the BRI, thanks also to the massive investments in infrastructures that are from the beginning essential for the project.
This information is also confirmed by the European think tank Bruegel, according to which the ten nations that will benefit the most from the BRI will all be European: Belgium, Holland, Slovak Republic, Austria, Hungary, Denmark, Moldova, Germany, Bosnia Herzegovina and Poland: the volume of business related to the trade with China should increase by 8.2% each. Different criteria, similar outcome.
The countries that have benefited the most from the infrastructural investments of the BRI are mostly in Asia, with Mongolia surprisingly at the first place, with a currently GDP growth rate of an incredible 5.8%, overturning many clichés on the countries of Central Asia with which it shares an upward trend. With the exception of Oman and the Maldives, which are on the sea route towards Europe, the nations that dominate the CCI index are in Southeast Asia: Singapore, Vietnam, Thailand, Malaysia, Cambodia, the Philippines and Brunei.
Jinny Yan's analysis is not only related to nations and their growth rates within the BRI, but also to the economic sectors, from which interesting considerations emerge. In fact, if trade of raw materials decreased, supply chains and tourism, which is Beijing’s real soft power tool, is growing. The Beijing Government controls the destinations offered by local tour operators determining the relations with those countries, according to its foreign policy.
Another bank, HSBC, offered positive indicators on the influence of infrastructures related to the Belt & Road Initiative on the economy. 900 BRI related projects are currently underway benefiting 80 countries. A volume of business that in Asia alone will reach 1.7 billion dollars by 2030.
This type of investment also benefits local businesses: in addition to the increase in trade, 30,000 new jobs will be created to complete roads, railways, ports and airports for companies working in the field of infrastructure and construction. Stuart Tait, Asia-Pacific Regional Director of HSBC calculates that the volume of trade generated by the investments in infrastructure will bring a benefit of 2.5 trillion dollars a year in the next decade. Over 300 Chinese companies have set up 26 economic cooperation zones in eight ASEAN related countries, investing nearly 2 billion dollars making a key contribution to the growth of nations such as Malaysia, Thailand and Indonesia.
Positive data that demonstrates how target investments in the infrastructure sector, even in remote areas, are not white elephants but can bring well-being, progress and an enormous growth potential for backward areas.