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3 Industries That Would Benefit From China’s Belt and Road Initiative

China is moving closer to taking over leadership position on the global stage. This week, during the Belt and Road Forum, China boosted its efforts to push through its Belt and Road Initiative to the world. Nearly 30 state leaders attended the event and have sounded their support on the initiative.

About Belts and Roads

Launched in 2013, the Belt and Road Initiative is China’s big plan to increase connectivity and cooperation primarily between China and the rest of the countries in Europe and Asia. The first stage involves China supplying capital for the development of infrastructure in countries along the old Silk Road that linked Europe and China.

Some analysts are also calling the initiative China’s attempt to exert more influence globally.

Regardless of what is China’s ultimate motive, the Belt and Road initiative would involve a sum of money that’s in the trillion-dollar range. That’s a huge amount of money and would thus have impacts on many industries. Here are three industries that may directly benefit from China’s project.

Infrastructure

Without a doubt, infrastructure companies and construction companies are at the forefront of benefiting from the Belt and Road Initiative. China is pushing forward with helping many developing nations redevelop and expand their ports, highways, railways, gas pipelines, and other types of infrastructure.

All these mean that billions of dollars’ worth of potential construction projects are up for grabs. Infrastructure asset owners could also profit from any redevelopment that occurs.

Trading

The main purpose for all these infrastructure is to serve the rising demand for goods and resources in China by facilitating trade between the giant Asian nation and the other beneficiary countries.

Therefore, with the expected rise in trade and commerce between Europe and Asia, global trading houses may stand to benefit.

Financials

As mentioned, the Belt and Road initiative is expected to be in the trillion-dollar range. With the amount of capital needed, assistance from banks would be required. Although China has set up financial institutions such as the Asian Infrastructure Investment Bank (AIIB) and the Silk Road Fund, much more funding would be needed to ensure that the Belt and Road initiative is a success.

Therefore, there would be a huge demand for funding needs and the banks with the deepest pockets and appetites for risk could profit from the project.

Foolish Summary

Of course, these are just the sunny side of things. Any project can still be a failure. There are many challenges ahead for both China and the other countries involved. But if they are successful, the Belt and Road project could change the balance of power in the global markets.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Stanley Lim doesn’t own shares in any companies mentioned.