Chinas Belt and Road Initiative Opportunities to be captured ANDY - - PowerPoint PPT Presentation

China’s Belt and Road Initiative Opportunities to be captured

ANDY NICHOLSON

VP Market Development Petrochemicals ARGUS, London, UK

Marco Polo

The European who “discovered” the Silk Road

• Born 1254, Venetian Republic.
• Raised by an aunt and uncle after

his mother’s death.

• Sound education, dealing largely

with trading matters.

• Left Venice in 1269 with father and

uncle to travel and trade in Asia.

• Returned to Venice in 1295 with

fortune in gems having journeyed some 24,000km.

• Dictated “The Travels of Marco

Polo” to Rusticello da Pisa in a Genoese gaol.

• Married 1300 Donata Badoer; three

daughters.

• Died 1324, a wealthy man.

Marco Polo’s Travels 1271-1295

Rail – Chongqing to Duisburg

• 10,000km
• 2,000km in China HST
• 3-4 trains per week
• 41 containers per train
• Transit time 8 days
• Countries traversed:

Kazakhstan Russia Belarus or Ukraine Poland (Austria)

• Train gauges change at China/Kazakhstan

and Polish/German & Austrian borders.

• One ship can carry as many containers as

250 trains.

Road – Kashgar to Istanbul

• The original silk road –existed 2100 years ago
• 4,000km
• Countries traversed:

Kyrgyzstan Uzbekistan (Samarkand, Bukhara) Turkmenistan Azerbaijan Georgia Turkey

• RoRo ferry from Turkmenbashi to Baku (12

hours crossing time)

Sea – Quanzhou to Venice

• Quanzhou was a major sea trading port in the eighth century.
• In the 13th century Marco Polo travelled 2 years by sea from

Quanzhou to Hormuz, thence overland to Istanbul.

• Quanzhou has today 80 shipping routes and handles freight

totalling 1mn t/yr

• Major stop-off points on the maritime sea road:

Vietnam Indonesia Singapore & Malaysia (Samarkand, Bukhara) Myanmar India Sri Lanka Pakistan Gulf Countries Djibouti Kenya Egypt Greece

What does the Belt and Road Initiative do?

For China

• Expands “soft power”.
• Offers privileged access to

developing markets in Asia, Eurasia, the Middle East and Africa.

• Provides secure routes of access

for strategic raw materials (gas from Kazakhstan).

• Gives competitive access to the

developed world’s largest single market: the European Union.

• Opens up areas of inland China for

development.

For Others

• Increases trading opportunities.
• Offers a source of infrastructure

investment and finance for developing countries.

• Provides logistically efficient access

to the developing world’s largest market.

• Gives opportunities to participate

in project financing and construction.

• Opens up areas of inland China for

sale of goods and services.

What are the opportunities for petrochemical companies?

• Sales of cost advantaged materials

– example: bulk polymers.

• Sales of technical products –

example: engineering polymers.

• Development of supply chains in

cost advantaged countries such as Kazakhstan.

• Development of manufacturing

sites within China – example BASF.

• Sales of technology.

Examples of current Chinese Imports

Paraxylene Benzene

1500 3000 4500 6000 7500 9000 10500 12000 13500 15000 2014 2015 2016 2017 Q1 2018 Others India Iran Saudi Arabia Kuwait Singapore Malaysia United States Oman Thailand Taiwan Japan South Korea 500 1000 1500 2000 2500 2014 2015 2016 2017 2018 Q1 '000t Others Mid-East Gulf India Malyasia Singapore Thailand Japan Korea

What risks are associated with the Belt and Road Initiative?

• China’s dominance of globally important

structure.

• Most major projects are carried out by Chinese

companies.

• Smaller countries become dependent on China

financially – the Djibouti example.

• China’s political influence is mistrusted – in

Eurasia for instance.

• Chinese domestic markets are managed in favor
• f local suppliers – ADD for styrene.
• Certain regions are potentially disadvantaged by

not being within the scope of the Belt and Road – South America, West Africa.

• Mistrust of China accompanies a wider reaction

against globalization.

• China threatens the existing world order

(particularly from a western perspective).

Concluding Thought

Old English Proverb: The stranger, if he be not a trader, is an enemy. quoted by Bruce Chatwin in his novel “The Songlines”.

Andy Nicholson Business Development Manager Petrochemicals Argus Media Ltd Lacon House 84 Theobalds Road London WC1X 8NL Tel: +33 1 3466 5591 Mob: +33 6 89958767 andy.nicholson@argusmedia.com