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China’s One Belt, One Road: Will it reshape global trade?

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China’s One Belt, One Road: Will it reshape global trade?

One of the biggest stories in Asian business is China’s One Belt, One Road initiative, an economic and diplomatic program that could transform trade.

The future of trade in Asia could depend heavily on what becomes of China’s expansive One Belt, One Road initiative, which calls for massive investment in and development of trade routes in the region. In this episode of the McKinsey Podcast, recorded in May, McKinsey senior partners Joe Ngai and Kevin Sneader talk with Cecilia Ma Zecha about One Belt, One Road—what it really means, what it needs to become a reality, and why people should take it seriously.

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Kevin Sneader: At one level, One Belt, One Road has the potential to be perhaps the world’s largest platform for regional collaboration. What does that actually mean? There are two parts to this, the belt and the road, and it’s a little confusing. The belt is the physical road, which takes one from here all the way through Europe to somewhere up north in Scandinavia. That is the physical road. What they call the road is actually the maritime Silk Road, in other words, shipping lanes, essentially from here to Venice. Therefore it’s very ambitious—potentially ambitious—covering about 65 percent of the world’s population, about one-third of the world’s GDP, and about a quarter of all the goods and services the world moves.

That is what’s at the core of this—at least a potential trading route. The belt, the physical road, and the maritime Silk Road would re-create the shipping routes that made China one of the world’s foremost powers many, many years ago.

Cecilia Ma Zecha: Joe, why is this important now?

Joe Ngai: China is seeing a bit of a slowing down in its growth. A lot of people are saying that that’s part of the next growth wave of Chinese exports, which is that it’s going to have its influence and its infrastructure build-out in many of these countries, most of them emerging markets, in lots of things that frankly have fueled the very high growth in China over the past decade.

Senior partners Kevin Sneader and Joe Ngai discuss the complex vision of One Belt, One Road and its potential impact.

What remains to be seen is if that can be replicated in many of these countries in the next ten years. That is very significant. Because many of these countries are really lacking in this infrastructure. I remember when I take groups of delegates into China; they always marvel at the trains, the railway stations, the airports, and all that, which frankly is a bit of a miraculous creation in the past two decades.

The question is going to be how these are financed: whether there is going to be long-term planning that’s required, and whether the local governments and the state governments are able to take the Chinese model and the Chinese infrastructure and figure out how they can have their own version.

Kevin Sneader: Some people have talked about this being the second Marshall Plan. It’s worth recalling that the Marshall Plan, which obviously was at the heart of the regeneration of Europe after the Second World War, was one-twelfth the size of what is being contemplated in the One Belt, One Road initiative.

So the question is the scale. The ambition is enormous, and the sums of money are equally enormous. That is why I think whether this initiative is successful will have two parts to it. One will be that the funds are indeed available and that governments are willing to deploy them.

The second is that the money can actually be deployed wisely. There is a real risk that this becomes a source of funding that gets misdeployed and doesn’t end up contributing to greater trade or greater economic collaboration but just gets wasted on projects that really should never have been funded in the first place.


Duterte expects 'more help' from China to develop PH
Dharel Placido, ABS-CBN News

Posted at Apr 29 2017 09:11 PM

MANILA – President Rodrigo Duterte on Saturday said he expects more help from China when he attends the "One Belt, One Road" (OBOR) summit next month.

Speaking at a press briefing after the 30th Association of Southeast Asian Nations (ASEAN) Summit, Duterte mentioned grants committed by China for at least two bridges in the Philippines.

“We’ve been promised about two or three bridges. That is before the coming One Belt, One Road conference. I expect that I can, not really get something out of it, but maybe more help to develop my country,” Duterte said.

Since assuming the presidency, Duterte has sought to thaw ties with China, which got frozen under the previous administration due to the South China Sea dispute.

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Duterte paid a visit to China last October, bringing home $24 billion dollars in investment pledges.

In May, Duterte will again set foot in China to attend the summit on China’s “New Silk Road” plan.

China has poured billions of dollars for its “One Belt, One Road” infrastructure initiative which aims to improve links between Asia, Africa, and Europe.

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Belt & Road Forum achieves 270 deliverables -- President Xi
By Jelly F. Musico May 16, 2017

BEIJING, May 16 (PNA) – A total of 76 agreements comprising more than 270 major deliverable results in five key areas of cooperation have been achieved during the successful Belt and Road Forum for International Cooperation held on May 14-15 here.

”We have put together a list detailing more than 270 major deliverables of the forum,” Chinese President Xi Jinping said in his late afternoon press briefing Monday.

President Xi said the more than 270 concrete results have been reached under the team Belt and Road efforts, boosting the confidence of all parties in enhanced cooperation.

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During the first Belt and Road Forum, Xi said China signed multiple new agreements with relevant parties in five key areas namely, policy, infrastructure, trade, financial and people-to-people connectivity.

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Some of the major agreements signed are economic and trade cooperation between China and governments of 30 countries including the Philippines, and cooperation documents with the United Nations and other international organizations.

The Export-Import Bank of China has signed Strategic Cooperation Framework Agreement regarding lines of credit with the Philippines’ Metropolitan Bank and Trust Company.

On the other hand, China Development Bank will conduct financing and bond underwriting cooperation with various foreign banks, including Metrobank of the Philippines.

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Interview with H.E. Jose Santiago Sta. Romana


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