Australian experts weigh in on Belt and Road Initiative’s role

Source: China Daily, 2022-07-07.

Daryl Guppy, President of the Australia China Business Council’s Northern Territory sub-council said that the Belt and Road Initiative (BRI) is a major contributor to economic growth in areas that have been ignored by other development programs.

Mr Guppy said he believes the BRI has four dimensions of benefit to boost growth in the post-pandemic era: hard, trade, soft and capital infrastructure.

BRI’s hard infrastructure includes long-term investments in high-speed rails, roads and bridges that have accelerated the development of Central Asia as an economic force and changed the way underdeveloped geographic areas are able to access global markets.

The BRI also impacts the mechanisms of cross-border trade and trade settlement by removing friction points. This enables greater participation in economic activity and reduces corruption, Guppy said.

Low-cost and efficient, trade settlement is the essential foundation of economic growth that enables small businesses to grow and drives an increase in prosperity, he added.

The soft infrastructure of the BRI sets the foundation for the digital economy, which is where real economic growth will come from in the post-pandemic era, Guppy said, because it removes the drag of intermediaries in the trade transaction process.

Also, because it breaks down the barriers that inhibit economic growth, Guppy added, the BRI boosts shared prosperity. Further opening of the capital account, debt markets and the liberalization of investment conditions are part of currency integration, a precursor to the growth of China’s capital markets.

A guideline for green development of the Belt and Road Initiative was released by China’s National Development and Reform Commission on March 28. The green development pattern of jointly building the Belt and Road will be formed by 2030, according to the commission’s announcement.

David Olsson, National President of the Australia China Business Council, said the council welcomed in March 2022 the publication of a key policy document that sets out comprehensive guidance to governments, project companies and financial institutions involved in the BRI and emphasizes cooperation on green finance, technology and standards.

Olsson said he expects Australian companies with expertise in energy transition technologies, environmental services, smart grid management, project design, project management and green finance will continue to be active and engaged.

There is no credible emissions pathway towards limiting global warming to 1.5°C without significant movements from China over the next decade to accelerate its energy transition and decarbonisation. China, as the main finance and trade partner of many of the BRI countries, can play a key role in the green and low-carbon transition of their economies, Olsson said.

He said the ASEAN region is one region where China and Australia both have strong business engagements and it has the most potential for BRI collaboration. Australian companies have long-established presences in Hong Kong. They see potential to leverage Hong Kong’s role as a major financial center and business hub to participate in BRI projects, particularly to support green economic development, in the Greater Bay Area.

Adam Handley, a Partner and China Markets Leader at MinterEllison, noted that China’s BRI can bring a range of opportunities for Australian enterprises across a broad range of sectors, industries and Australian enterprises of all sizes.

The areas where Australian enterprises can get involved in the BRI include project financing, design, procurement, construction, sales and application of Australian know-how, according to Handley.

The BRI presents an opportunity for Australian enterprises in the agribusiness, infrastructure and energy sectors to expand export markets but also attract domestic investment capital, Handley said.

“Chinese investment has played a major role in supporting economic growth within my own home State in Western Australia. Since the significant increase in interest in investing in Australia from 2007, Western Australia has benefited from a significant number of Chinese investments in energy and other sectors,” Handley said.

Those investments have created thousands of local jobs and generated hundreds of millions of dollars in taxation and royalty revenues for the people of Western Australia as well as bringing about know-how, he added. In some sectors, like in the processing of Western Australia’s magnetite iron ore, this has helped open new export markets for the region.

“I would like to think that Australia can take a fresh look at what the modern BRI framework offers for Australian businesses, particularly in our geographic region. I don’t think it is a question whether current agreements remain or don’t, but how our governments can reengage to work out what opportunities in BRI are beneficial for Australia to be involved in,” Handley said.

Duncan Calder, past National and West Australia president of the Australia China Business Council and ambassador for Australia China Friendship Society West Australia, emphasized the importance of people-to-people relationships in promoting the bilateral ties of China and Australia.

Calder believes that people-to-people and organization-to-organization relationships can help to enhance government to government relationships. He said he has many close and loyal Chinese friends supporting each other during difficult times in their lives. He is just one example of hundreds of thousands of Australian people who have close Chinese friends.

Close relationships between Chinese and Australian people have driven trade, investment, artistic, cultural and sporting interactions, which is very critical to strengthen the Australia-China relationships, Calder said.

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