Making sense of Belt and Road – The China analyst: CLSA
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Making sense of Belt and Road – The China analyst: CLSA

It falls to analysts like Alexious Lee, head of China industrial research at CLSA, to make sense of the vast scope and long-term themes of Belt and Road. Lee heads CLSA’s research coverage of Belt and Road and public-private partnerships, assisting clients seeking access to China for projects related to the new Silk Road.



Speaking in July, Lee says that $600 billion of framework agreements have been signed around infrastructure, of which about $400 billion is in energy, power and transportation.

“The other 30% of these projects would be policy projects – those that depend on what the country wants. So, if Thailand wants a metro system, China can help.

“So, 70% of what has been signed is to enforce energy and trade security, and 30% is for bilateral collaboration.”

Of that $600 billion, Lee sees $200 billion as being underway. He believes the total value of projects could treble within five years. He is encouraged by, for example, seven countries coming together in May to talk about improving connectivity through railway development and signing improvement plans to increase speed, quality, connectivity and custom clearances.

“Politically, that’s a very big achievement,” he says. “We are starting from a stage where we have had no investment in railway at all: it’s all been talk.”

Lee, like many of the people interviewed, was at the Belt and Road Forum in Beijing in May, and came away from it with a different point of view to many others.

“Global guys always think infrastructure is the key theme in Belt and Road,” he says. “It’s not. In the opening speech, it was clear: the most important theme to the Chinese government is trade.”


China has 15 free trade agreements today, he says, with an eclectic bunch of partners, from Asean to Iceland, Australia to Peru; he predicts the number will reach 30, maybe even 40, by the end of 2020.

Lee is also interested in the way that the AIIB and Silk Road Fund – although they are very different institutions – may shape the way funding works in the region.

Before the appearance of these institutions, he notes, there were some countries that appeared to be off-limits for the World Bank and ADB for political reasons: he cites Thailand after the military coup as an example. After China began to fund in Thailand, the international multilaterals changed their tune and re-engaged.

Alexious Lee, CLSA

“China’s growth in the region may change the way traditional agencies decide who they lend to and who they do not want to lend to,” he says.

He notes, however, that AIIB is not a policy instrument like the Silk Road Fund (a message AIIB is extremely keen to convey). “AIIB wants commercially viable projects with a solid internal rate of return,” he says. “Silk Road Fund is 100% Chinese sovereign and will take on strategic projects that cannot be quantified just by IRR. It is, in simple terms, a tap for financing countries that have been deprived of funding from the rest of the world.”

Although Pakistan is the place that gets the most headlines for Belt and Road projects so far, for Lee the real meat of it all is the ‘stans’ of central Asia.

“They are the most eager to work with China,” he says. “Kazakhstan, Uzbekistan – these are oil and gas countries in a market crying out for energy security, and they are much more important to China than whether they can get involved in an Indonesian railway to Bandung.” (China is involved in the Jakarta-Bandung railway, incidentally, although the $5.5 billion project remains 60% owned by Indonesia.)

As an analyst, Lee is expected to find the stock market winners that come with Belt and Road. Lee has buy recommendations on the H-shares of China Communications Construction Company and China Railway Construction Corp, but an under-perform on China Railway Group, demonstrating that simply buying everything in a sector is to miss the nuances of individual company dynamics.

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