Date
20 September 2017
Xinjiang plays an important role in China's trade with central Asian countries. Photo: fastwestchina.com
Xinjiang plays an important role in China's trade with central Asian countries. Photo: fastwestchina.com

Why Xinjiang is well positioned to gain from Belt & Road plan

China’s Belt and Road plan has led to many questions running through people’s minds. Among the key debating topics are these: Does the initiative only cover infrastructure projects, or will other industries also stand to benefit? Also, how can small and medium companies get involved?

To get some answers, I made a trip recently to North Mining Shares Company (00433.HK), an entity that is engaged in mineral resources exploration and mining in the country.

North Mining is one of those firms that are seeking to leverage the Belt and Road initiative to ensure a better future for themselves.

As commodity prices are very sensitive to economic cycles, the company has a particularly good reason to aim for business transformation.

In this, it feels the nation’s Belt and Road plan will come in handy.

Last month, North Mining acquired Xinjiang Casiavision Security Technology Company, which focuses on face technology and intelligent video analysis technology and applications for use in different security systems.

Now, how does security systems-related business in Xinjiang relate to Belt and Road?

Well, let’s bear in mind that Xinjiang, according to a blueprint from China’s National Development & Reform Commission, has been positioned as the gateway to the west, serving as a transportation hub, and commercial, logistics and cultural center along the Silk Road, 

To realize such potential, Xinjiang needs to upgrade its security systems infrastructure.

The autonomous region in northwest China has been relying on civil defense organizations to maintain public order. Amid this situation, the region has much lower security standards compared to those in first-tier Chinese cities.

Now, with China’s Belt and Road plan, optimizing the security systems in Xinjiang has become a critical issue, providing opportunities for relevant hardware and software products.

It’s estimated that Xinjiang’s fixed-assets investment will increase to 1.5 trillion yuan this year from 998.4 billion yuan last year.

Xinjiang, in fact, enjoys great geographical advantage in the Silk Road Economic Belt.

First of all, Xinjiang borders a number of countries including Russia, Kazakhstan, Kyrgyzstan, Tajikistan and Mongolia, and it has a border line stretching more than 5,000 kilometers. That makes the region a key gateway for China to connect with various neighboring nations.

Xinjiang also trades actively with central Asian nations and it plays an important role in China’s economic landscape. Chinese imports and exports usually go through Xinjiang before being shipped to or from central Asian markets.

China intends to build three transport routes across Xinjiang in order to transform it into a regional transportation hub. Those three routes will connect central, western and southern Asian nations and Russia with China. As a result, the transport network will help Xinjiang become a distribution center for goods from central Asia and inland China.

Besides, Xinjiang will build national-level road transport networks centering around Urumqi and Xining, and more than 30 logistics parks. The region will also set up different free-trade zones and bonded areas and cement its logistics network through railway and flights.

That would enhance Xinjiang’s role as a gathering, distribution and transit center between China and central Asia or even Europe.

And all this will create demand for relevant management systems. Cross-border e-commerce development may help Xinjiang emerge as a storage and distribution hub for central Asian markets.

Given all these factors, Xinjiang’s growth could take off in coming years, throwing up opportunities for several support industries in the region.

Investors would do well to keep this in mind and focus on relevant sectors.

This article appeared in the Hong Kong Economic Journal on Sept 11

Translation by Julie Zhu with additional reporting 

[Chinese version 中文版]

– Contact us at [email protected]

RC

Senior investment banker

EJI Weekly Newsletter

Please click here to unsubscribe