Chinese investment ensures once-struggling facility has bright future
The port of Piraeus in Greece is an example of the BRI success story. COSCO Shipping, which has a 35-year contract to run the facility, has invested heavily in infrastructure. (PHOTO PROVIDED TO CHINA DAILY)
On the coast 32 kilometers from Athens, the Greek capital, a forest of cranes at the Port of Piraeus is busy 24 hours a day loading and unloading thousands of containers transported between Asia and Europe.
Flourishing trade volumes have created nearly 2,000 local jobs in less than a decade, transforming Piraeus into the Mediterranean's busiest port.
The key to this success is investment made since 2008 by China COSCO Shipping to upgrade infrastructure. In that year, the Greek government decided to privatize the port's operations amid the economic problems facing the country, and COSCO Shipping won a 35-year contract to operate the facility.
Thanks to COSCO's investment, Piraeus became the world's 38th-busiest container port in 2010, rising in the rankings from 93rd place. Since then, Piraeus has seen its handling volumes grow about sevenfold.
"We are witnessing a new era in the history of Piraeus," said Tassos Vamvakidis, commercial manager of Piraeus Container Terminal, a COSCO subsidiary.
Vamvakidis said that out of the 1,900 PCT employees, only a handful are Chinese and the rest are locals. "COSCO has created local jobs and boosted our economy. I am proud to be working for this company," he said.
Piraeus' success is just one example of the immense business potential made possible through the growing trade and connectivity between China and Europe, highlighted by the Belt and Road Initiative, also known as the BRI.
A cargolux jet flies the Zhengzhou-Luxembourg route. (PHOTO PROVIDED TO CHINA DAILY)
Proposed by President Xi Jinping in 2013, the BRI advocates improved connectivity of infrastructure, trade, ideas and knowledge between Europe and Asia.
Frequently cited as the "project of the century", the initiative involves nearly 70 countries and more than 4.8 billion people. It covers economies worth a combined US$21 trillion, accounting for 62 percent of global GDP.
Contrary to popular perception, the BRI does not represent a single clearly drawn trade route, nor is there an authoritative list of projects. Instead, it is a vision that fosters globalization and common prosperity among all countries willing to engage, and is continuously expanding its reach.
For this reason, statistical projections on the BRI's impact can vary, but all observers agree on the vision's "grand nature". HSBC estimates that Belt and Road development projects will cost up to US$6 trillion in the next 15 years, while PricewaterhouseCoopers estimates the cost at US$5 trillion. Fitch ratings agency believes projects worth US$900 billion were already planned or underway by last year.
Some projects, such as Piraeus, are clearly visible. Another example is the Lyon-Wuhan freight rail line between the French city of Lyon and Wuhan, capital of Hubei province. Launched in 2016, the line has greatly reduced transportation time and costs compared with sea freight. Since then, thousands of bottles of Bordeaux wine, auto parts and French agricultural products have been exported to China.
Last year saw the launch of the "Silk Road in the air" cargo flight, connecting the trading hubs of Zhengzhou, capital of Henan province, and Luxembourg. This has facilitated trading in many temperature-sensitive products, such as fresh fruit and pharmaceuticals.
A China COSCO vessel docks at the Greek port. (PHOTO PROVIDED TO CHINA DAILY)
From the Port of Rotterdam in the Netherlands to the vast terminal at Duisburg's inland port in Germany, logistics hubs across Europe are busy upgrading their facilities to allow more business as a result of surging trade volumes boosted by BRI connectivity.
Ivona Ladjevac, head of the regional center for the Belt and Road Initiative at the Institute of International Politics and Economics in Belgrade, the Serbian capital, said the BRI provides a valuable opportunity to strengthen connectivity between European countries.
"BRI infrastructure projects can bring countries in southern Europe closer to the North, reduce transport costs and increase the flow of people and goods," Ladjevac said.
The Dutch financial company ING estimates that a 50 percent reduction in trade costs between countries taking part in the BRI could increase world trade by 12 percent.
But Belt and Road opportunities are not just about infrastructure or trade.
Douglas Morton, head of Asia research at Northern Trust Capital Markets, said: "Its goals reach far beyond construction projects, with the ultimate aim of stimulating regional GDP per capita. The initiative can bring together Chinese resources with European expertise at a time when global connectivity is becoming increasingly scarce."
A container sent by rail from Hamburg, Germany, is unloaded in Wuhan, Hubei province. (PHOTO PROVIDED TO CHINA DAILY)
Many multinationals are preparing to supply technology to Belt and Road countries in collaboration with Chinese companies.
Power equipment giant Alstom is looking to supply technology to help Chinese hydropower companies bidding for dam contracts in third countries within the BRI area, while Schneider Electric is supporting Chinese concrete, steel and water treatment companies looking to secure power and construction deals.
Siemens has agreements with more than 10 Chinese companies to supply digital technologies to Belt and Road power, energy, building and manufacturing projects.
Meanwhile, the City of London has campaigned heavily to make the British capital a finance hub for Belt and Road deals to enforce London's global reach amid Brexit uncertainties.
HSBC has financed nearly 100 projects in Belt and Road countries, while Standard Chartered funded more than 50 Belt and Road deals last year alone and in December it announced an additional US$20 billion commitment to BRI projects by 2020.
The UK Treasury has appointed Douglas Flint, former chairman of HSBC Holdings, as the country's Belt and Road envoy, an important government post. Meanwhile, the government agency UK Export Finance has announced 25 billion pounds (US$34 billion) of funding to support British companies' exports to Belt and Road projects.
China COSCO Shipping containers stand at Piraeus. (PHOTO PROVIDED TO CHINA DAILY)
However, despite the many opportunities, the initiative is not free from concern and debate.
The high number of Belt and Road infrastructure contracts won by Chinese companies has made some non-Chinese rivals wonder if the bidding process is fair.
Carlo d'Andrea, vice-president at the European Union Chamber of Commerce in China, a nonprofit business association with 1,600 members, said: "Our member companies are really keen to bid for BRI projects, but they do not know how. They feel that the Chinese government should take a lead to share Belt and Road project information online, and in the English language."
Bogdan Goralczyk, director of the Centre for Europe at the University of Warsaw in Poland, said that making more information publicly available would help to convince European companies that Belt and Road contracts are awarded fairly, instead of favoring Chinese companies.
"We need to be convinced about the quality of Chinese proposals. The Belt and Road Initiative gives us an opportunity, but it should respond to some expectations of the European side," Goralczyk said.
Debt sustainability is another concern. This year, Christine Lagarde, the International Monetary Fund's managing director, said at a conference in Beijing that China should be wary of financing unnecessary and unsustainable projects in countries with heavy debt burdens.
But experts said much of the criticism is unfounded.
Ladjevac, of the Institute of International Politics and Economics in Belgrade, said, "Notions about a possible debt trap created by the BRI are not fair at all," adding that many countries with high debt levels are in this situation because they took on debt from other funding sources such as the World Bank and the IMF.
She said she believes criticism directed at the BRI arises partly because the initiative is relatively new. Many companies are in the early stages of realizing how they can become engaged with it and a lot of projects have yet to prove their value through concrete results.
HONG KONG NEWS