20 April 2019
Heavy machinery maker Sany Heavy gets 70 to 80 percent of its overseas orders from countries along the Belt and Road routes. Photo: Xihuashe
Heavy machinery maker Sany Heavy gets 70 to 80 percent of its overseas orders from countries along the Belt and Road routes. Photo: Xihuashe

Belt and Road Initiative is not just about infrastructure

Nearly 30 world leaders will be attending the Belt and Road Summit in Beijing on May 14-15.

Chinese President Xi Jinping first put forward his grand vision, now known as the Belt and Road Initiative, at the end of 2013.

Belt and Road stocks have since been a popular trading theme in the equities market, yet most of the attention has been placed on infrastructure plays.

In fact, there is a lot more to the scheme than just infrastructure. Related trade, for example, has been robust. The private sector, too, has been very active in pursuing the initiative.

China’s trade in goods with nations along the Silk Road Economic Belt and the Maritime Silk Road reached US$947.8 billion in 2016, representing a quarter of China’s total merchandise trade for the year.

Chinese private firms accounted for 58.9 percent of the trade last year, compared with 46.6 percent in 2011, official data showed.

As many as 953 mainland listed firms cited the Belt and Road Initiative in their annual results from 2014 to 2016. They include 416 private firms, or 43.65 percent of the total.

These private companies are involved in construction, energy, automobiles, telecoms, agriculture, transportation, machinery, information technology, and non-ferrous metals, among other industries.

Topping the list of exports to Belt and Road countries are electrical machinery, equipment and parts, with the value amounting to US$116.59 billion last year.

The second biggest item were boilers, mechanical machinery, appliances and parts, totalling US$92 billion.

As a result, machinery and equipment stocks are benefiting greatly from the national strategy.

Sany Heavy Industry (600031.CN), China’s largest maker of heavy machinery, said markets along the Belt and Road routes contribute 70 to 80 percent of its total overseas revenue.

The company reported a 30 percent jump in overseas market revenue in the first quarter.

Numerous countries are also setting up production facilities in Belt and Road countries.

TCL (000100.SZ) said it has set up plants in Vietnam, Poland, Mexico, Egypt and Brazil. The company is also talking to India and Pakistan about similar ventures.

Telecom companies are aggressively expanding into these markets, too. Jiangsu Zhongtian Technology (600522.CN) said it plans to invest another US$100 million in nations along the routes and build 10 overseas factories by 2025.

This article appeared in the Hong Kong Economic Journal on May 12

Translation by Julie Zhu

[Chinese version 中文版]

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