Summary: Welcome to BLP’s ‘Belt and Road Insights’ July 2017 issue – a selection of interesting Belt and Road news items, distilled into a monthly ‘speed read’.
Updates from the New Silk Road
The Belt and Road Initiative is a major development strategy launched by the Chinese government in September 2013 to sponsor and promote economic co-operation among countries along the proposed Belt and Road routes. With our focus on built environment and infrastructure development, we aim to keep you updated on the latest developments.
The SFC announces plans to establish Hong Kong as the leasing financial fund raising centre for Belt and Road projects
In a drive to establish Hong Kong as a regional financial hub for Belt and Road infrastructure projects, the Hong Kong Securities and Futures Commission (the “SFC”) has announced plans to incorporate a revised approach to infrastructure companies who are targeting Belt and Road project opportunities to list on the main board. Notwithstanding, a number of these companies currently being unable to meet certain listing criteria.
For example, the SFC is unlikely to require main board constituents to have a HK$50 million profit before listing (the normal rules), if it is located in a country tied to the Belt and Road and has acceptable risk levels. The SFC added that the flexible approach is based on the provisions of the Securities and Futures (Stock Market Listing) Rules, which gives the SFC powers to regulate the Hong Kong market and facilitate market development initiatives.
With a relative slowdown of major listings in the city, Hong Kong has slipped from top position to number four in the global IPO rankings. With the rules in place specifically focused on the infrastructure sector it is likely that a similar approach will also be adopted to support energy companies. This is in light of Saudi Aramco, the national oil company of Saudi Arabia with an expected value of US$2 trillion, which would form the largest IPO ever currently its options as to where it will eventually list.
Singapore reinforces its commitment to Belt and Road Initiative
Despite the absence of Singapore’s Prime Minister Lee Hsien Loong from the recent Belt and Road Summit in Beijing, in a recent meeting in June between the respective head of Foreign Affairs of the two countries, Singapore has reinforced its intention to cooperate with China on the Belt and Road Initiative.
The two countries have pledged to cooperate together based on three principles. The first is for Singapore to establish itself within the existing trade network which has been created through the Initiative.
Secondly, through its standing as a regional financial hub, Singapore will look to provide support in raising funds to jointly launch infrastructure projects across South East Asia, South Asia and Africa.
Finally the two countries pledge to cooperate in the training and sharing of technology to Government officials across the Belt and Road network.
The meeting was held in the backdrop of ongoing diplomatic tensions between the two countries over Singapore’s stance over the current territorial disputes in the South China Sea.
China expands the Belt and Road Initiative into the Artic
At the Belt and Road Forum which took place in Beijing earlier this year, China prioritised dialogues between attendees on plans for developing transportation infrastructure along the Indian Ocean and Eurasian land routes.
As of 20th June, China has now formally announced it is also considering the Artic region as part of its wider plans of establishing a 21st Century Maritime Silk Route. Falling under wider plans for three ocean-based “blue economic passages” the route would allow for China to connect to Europe via the Arctic Ocean.
Central to the success of the route will be China’s existing relationships with Russia who have long been identified as one the largest proponents of the Belt and Road Initiative, in addition to improving dialogues between several Nordic states. To date Finland and Norway have already expressed an initial interest to collaborate with China in the Artic.
China already has existing interests in the resource-rich region, as reflected in the Silk Road Fund holding a 9.9% stake in the Yamal liquefied natural gas project which is located in the Russian Artic. The Chinese SOE China National Petroleum Corporation ("CNPC") holds an additional 20% stake in the project.
California to tap into China’s clean energy drive
California’s Governor Jerry Brown recently delivered a keynote speech at a Beijing clean energy forum, addressing the U.S. state’s ambitions to foster partnerships with China to develop low-carbon and green energy solutions along the Belt and Road.
Despite the U.S. withdrawal from the Paris Agreement on Climate Change, California in its capacity as an individual State has not been deterred from opening active dialogues at an international level and at a meeting between Brown and President Xi Jinping, discussions were held on mutual opportunities to cooperate on trade energy technologies, innovation and environmental protection agreements.
It is widely considered that the Chinese Government view the recent ties with California as a potential blueprint for the future establishment of local-level dialogues along the Belt and Road.