Belt and Road Weekly Investor Intelligence #84

This week, China Plus One is discussed with Vietnam as a China alternative, while we examine China’s reach into Pacific Asia with trade and investment discussions in Papua New Guinea and Timor-Leste. Russia has reiterated its commitment to a pivot to Asia with extensive plans in the Russian Far East to provide better highway and rail connectivity to China in projects costing billions of dollars. We also look at opportunities to sell to the Russian E-Commerce market now the foreign players have exited – leaving a multi-billion consumer gap to fill.    

Vietnam’s Trade Diversification and the China Plus One Strategy   

Vietnam’s exports rose to 48.2% in March this year from the month earlier and 14.8% for the year earlier to US$34.7 billion. China’s nearby Shenzhen exports in comparison contracted 14% year on year to US$18.3 billion due to pandemic related lockdowns. We examine Vietnam’s position in the China plus one strategy as a favorable investment destination due to its proximity to China, its coastline, and lower export tariffs implemented by free trade agreements. We also look at the complementary relationship between Vietnam and China and their close trade ties – vital for businesses considering blending Vietnam production with existing China manufacturing and sourcing functions. 

Pacific Asia

China, Timor-Leste To Boost Trade & Investment Cooperation  

China’s Foreign Minister, Wang Yi has been visiting the South Pacific Islands, with Papua New Guinea and Timor Leste in East Asia being the last stops on this regional trip. Following concerns about a proposed Chinese security presence in the region, discussions have concentrated far more on trade and development. Timor-Leste is the eastern part of the massive Timor Island than comprises Indonesia to the West, and which although largely undeveloped, has been considered as a candidate nation to join ASEAN. China-Timor Leste bilateral trade doubled in 2021.   

A Potential China-Papua New Guinea Free Trade Agreement   

Chinese Foreign Minister Wang Yi has been visiting Papua New Guinea’s Prime Minister James Marape in the Papuan capital, Port Moresby on the final leg of his Pacific Islands tour. Papua New Guinea is underdeveloped but has significant natural reserves, while China is already a major investor in the country and buys much of PNG’s gas, minerals, timber, and other resources. Bilateral trade has increased from US$3.21 billion in 2020 to US$4.02 billion in 2021.   

Russia

Changing E-Commerce Logistics: Russian Cross Border E-Commerce Down 51%, But Expected To Rebound With Goods From EAEU And Asian Markets  

A rebalancing is occurring in Russia’s e-commerce industry, where bilateral trade fell 51% in April but the domestic market boomed with sales up 32%. Meanwhile, a developing EU-US goods market providing access to Russian consumers is emerging via EAEU resellers. 

Russia’s Largest Infrastructure Project – Far Eastern Rail Networks With Asian Connectivity 

Proposals have been made to commence work on a US$44 billion infrastructure investment combining two Far Eastern rail projects and a bridge to Sakhalin Island. Combined, these would provide an extensive rail network throughout Far East Russia and increase Russia-Asian trade by hundreds of billions of dollars. 

Russia-China Meridian Toll Highway Under Consideration Again 

The feasibility study for the project to build the Meridian Toll Highway, which was proposed a few years ago, is being worked on again with Chinese partners, Igor Koval, the Deputy CEO for investment policy at Russia’s SOE Russian Highways (Avtodor), has said this week. The proposed 2,000km superhighway could link millions of consumers in Russia and China via toll road at lower costs.  

Belt & Road Initiative

China’s Belt & Road And Beyond    

All the latest global headlines about China’s Belt & Road Initiative. 

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