China’s Rail-cum-Economic Diplomacy pushes Chinese Business to Global Stage

Shanghai: Chinese experts and business executives have lauded Beijing’s proactive rail economic diplomacy, saying proposals such as the Belt and Road initiatives and Asia Infrastructure Investment Bank (AIIB) will help facilitate Chinese companies’ global reach.

China’s participation in EFSI will benefit Chinese enterprises in securing a foothold in European infrastructure construction and improving technologies and products through collaboration with developed countries, Yu Weiping, Vice President of China’s state-owned high-speed rail maker CRRC Corporation Limited, said in his speech at the forum.

This week, China’s first advanced multiple unit train to be exported to Europe finished construction at a subsidiary of CRRC Corporation Limited. It will be delivered to Macedonia.  In addition, the recent move of CRC setting up of its US Subsidiary with initial assets worth US$ 10 million has actually stunned its nearest competitors from the US and Europe.

High-speed rail diplomacy has become one of the features of Chinese leaders making visits abroad, as they seek to export the technology that has transformed rail travel in China in a few short years.

Premier Li Keqiang, known as the high-speed rail salesman, has promoted China’s rail technology on almost every overseas visit. While on a recent visit to Russia, Lin signed nearly 40 cooperation deals, including a memorandum of understanding on high-speed rail.

As of this year, CNR’s rolling stock and related production technology had been exported to more than 90 countries, including France, Brazil, Ethiopia, Nigeria, Angola, Kenya, Argentina, Thailand, India and the US. It achieved its best performance overseas during the first half of the year, with signed deals totaling US$2.0 billion.

In early November, a consortium of Chinese companies led by CRCC won a $3.7 billion contract to build a bullet train in Mexico; that contract was canceled a few days later due to suspected corruption on the Mexican side. But the aborted deal is still a sign of overseas demand for China’s rail technology.

Nor are rail deals limited to developing nations: In October, Boston’s transit authority signed a $567 million contract with China’s CNR Corp. to build 284 subway cars.

In addition to stimulating domestic manufacturing demand for steel and rail equipment exports, China’s leaders hope the flurry of railway deals will have soft power benefits as well. The Nigerian railroad will be “a mutually beneficial project,” as CRCC Chairman Meng Fengchao told Xinhua. He pledged to hire at least several thousand workers from Nigeria; in the past, Chinese companies have been criticized for bringing in Chinese workers to complete large engineering projects, thus denying work opportunities to local populations.

China’s proactive rail-cum-economic diplomacy has provided Chinese enterprises with trade and investment opportunities in most parts of the world, Wu Jianmin, Executive Vice Chairman of China Institute for Innovation and Development Strategy, said at the China and Globalization forum on Sunday.

Since 2013, Beijing has been promoting the Belt and Road initiatives, projects of international trade and the AIIB and established the Silk Road Fund in 2014.

China has global ambitions to export its technology, with the twin objectives of securing access to energy and other commodities in return for financial and technical support. The Indian ventures would be a stepping stone towards realising ambitious proposals to build high-speed railway lines from China to Europe, North America and Southeast Asia, and across South America and Africa. These are all practicable. In the space of five years, China has become a world leader in the technology, amid hotly disputed claims by Japan of theft. China has already built 10,000km of track, and expects to have built five times that much by the end of the decade.

Building high-speed railways across borders is another matter, politically and economically, however, and visions are not easily turned into reality. For example, since Thailand approved two high-speed lines with China, part of a planned link between Kunming in the southwest and Singapore, environmental and social concerns have thrown doubt on a section between Myanmar’s Rakhine state and Kunming. Such huge projects are also costly, raising questions about the cost-benefit equation for China and the ability of foreign governments to pick up a big enough share of the investment. Funding, technical and operational issues are magnified by distance, geography and the number of countries involved.

Premier Xi’s visit to India recently concluded with the signing of a memorandum of understanding between Beijing and New Delhi for co-operation on railways, following talks between a Chinese delegation and Indian railway officials. Chinese companies are making joint bids for five high-speed-rail projects in competition with Japan.

That said, cross-border high-speed rail is more than a practical tool of China’s resources diplomacy. It has rich potential for economies, for business in cargo and passenger transport, and job creation. But the new age of rail calls for persistence and resilience to setbacks as well as vision.

That said, cross-border high-speed rail is more than a practical tool of China’s resources diplomacy. It has rich potential for economies, for business in cargo and passenger transport, and job creation. But the new age of rail calls for persistence and resilience to setbacks as well as vision.

Cao Dewang, president of Fujian-based Fuyao Group, the world’s second largest automotive glass maker, told Xinhua he considers today’s changes in economic diplomacy a “great opportunity” for enterprises similar to China’ s opening-up and reform policy in 1980s.

According to statistics released by Ministry of Commerce, Chinese investors have made direct investments in 3,426 enterprises in 146 countries and regions around the world from January to May this year, with a combined non-financial investment of US$45.4 billion, increasing 47.4% year-on-year.

At the forum, Cui Mingmo, president of the China Association for International Economic Cooperation, described the increase as a “welcome and huge leap forward.”

Wu, also former China’s Ambassador to the United Nations and France, suggested that increasingly intertwined interests would bond China and its neighboring nations together in economic cooperation despite escalating territorial and maritime disputes.

In March, Xi called on Asian countries to “move towards a community of common destiny and embrace a new future” in his keynote speech at this year’s Boao Forum for Asia Annual Conference.

More than 60 countries from Asia, Africa and Europe have vowed to participate in the Belt and Road initiatives.

The AIIB is anticipated to begin formal operations by the end of 2015 after its 57 prospective founders signed its charter in June.

During Chinese premier Li Keqiang’s European trip last month, leaders from both sides expressed great interest in China’s involvement in the European Fund for Strategic Investments (EFSI).