Belt and Road Initiative dream: Can China really do it?

This is an edited excerpt of a speech by Liew Mun Leong, chairman of Surbana Jurong and of Changi Airport Group, delivered at the 'Global Infrastructure Initiative 2017' Forum on May 25.

Proposed by China in 2013, "One Belt, One Road", now renamed the "Belt and Road Initiative" (BRI), is a global economic plan to create regional connectivity through infrastructure development, and promote world trade and economic growth.

It plans to connect 65 countries across Asia, and the Middle East to Europe by land along the historic Silk Route and another maritime route, down the Pacific and Indian Ocean and up the Mediterranean Sea. It is arguably the most ambitious economic project in the 21st century in physical and economic scale and geographic spread.

The Asia-Pacific will need to spend US$26 trillion (S$36 trillion) from now to 2030 on infrastructure, and Asia alone will need up to US$1.7 trillion in infrastructure investment annually over the next 10 years. One estimate of the BRI's cumulative investment over the long term is between US$4 trillion and $8 trillion. BRI countries therefore gladly welcome and support the BRI to accelerate their economic growth.

So does China have the capability to deliver this grand plan?

Over the past few decades, China has convincingly demonstrated its capability to deliver large-scale projects successfully. I first visited China in 1982. At US$200 gross domestic product (GDP) per capita, it was the most populous but one of the poorest countries in the world. Within 35 years its GDP per capita gained 40 times to over US$8,000.

Now ranked as the world's second-largest economy, it miraculously built up, at one time, more than US$4 trillion in reserves.

No one could have forecast China's dramatic transformation. China isn't bestowed with oil or other rich natural resources, yet it managed to lift more than 700 million people out of poverty and grew its urbanised population from 16 per cent to 55.5 per cent. It is the most successful story of migration in mankind's history.

I have been travelling to China very regularly over the past 20 years, dealing in the real estate business in various cities. Initially, I was less than sanguine about the mammoth projects China chose to embark on.

Shanghai's Pudong financial district is one of several gigantic and transformational infrastructure projects China has succeeded in delivering in the last 30 years. Within 35 years, the country's GDP per capita gained 40 times to over US$8,000 (S$11,000). PHOTO: REUTERS

In the last 30 years, China has succeeded in delivering several gigantic and transformational infrastructure projects. These include Shanghai's Pudong district; the Three Gorges Dam; more than 20,000km of railway, including the Qinghai-Tibet high-altitude railway; the Beijing-Shanghai high-speed railway, which is the world's longest high-speed line ever constructed in a single phase; the Hong Kong-Zhuhai-Macau Bridge; as well as the Beijing Capital Airport, just to name a few.

I have seen too many of China's ambitious dreams at work and how they have all become reality in an incredibly short time. I have therefore learnt not to underestimate China or doubt its proclaimed ambitious plans.

Of course, these were largely domestic projects and I am mindful that cross-border undertakings, such as the BRI, will pose dramatically different challenges. Such a massive undertaking will certainly face a myriad of uncertainties caused by political, financial, technical, environmental, social, or other collaboration issues.

China will need to move this initiative in partnership and collaboration with other countries, as well as commercial and multilateral development organisations, to ensure its ultimate success.

From 2014 to 2016, total trade between China and the BRI countries exceeded US$3 trillion. Trade in services is also rising in proportion. Chinese investment in BRI countries now amounts to US$60 billion, with another US$14.5 billion signed during the BRI Forum.

In the next five years, Chinese outbound investment is forecast to reach a total of US$600 billion to US$800 billion and it will largely go to BRI countries. From an economic standpoint, many companies from developed countries such as the US, the EU and Japan can also benefit from the BRI.

China and the host countries will certainly need to tap global industries and service providers from the developed countries in the whole value-added chain, ranging from master-planning, design and architectural services to consulting, project management, legal and financial services.

Such industry players will welcome the potential of such big jobs outside their own countries, where infrastructural developments have typically reached a more mature stage.

The knock-on effects of the BRI's implementation and the potential benefits to industry players from developed countries cannot be denied.

With the BRI and increasing growth and development, today's developing countries in regions such as Asean, Central Asia and central Europe can develop, industrialise and urbanise. As income levels in these regions increase and the middle class expands, they can also become future markets for developed countries.

The world now lacks a key growth engine. I see the BRI as the main locomotive for the global economy over the next decade.

If all parties concerned do get on board and work with China in this plan, the implementation of the BRI will likely transform the world economic landscape for the better. It will result in a "win-win-win" situation for China and developing as well as developed countries.

A version of this article appeared in the print edition of The Straits Times on June 02, 2017, with the headline 'BRI dream: Can China really do it?'. Print Edition | Subscribe