China's Belt & Road
The arrival in London of the first direct freight train from eastern China earlier this year grabbed headlines.
For many, it was the first demonstration of how China’s ambitious Belt & Road infrastructural programme could have tangible economic benefits beyond Asia. And as the project reaches its next stage, it’s becoming clear that UK business needs to take note - the Belt & Road Initiative may well be one of the major shaping factors for post-Brexit global Britain.
Announced by Chinese President Xi Jinping in 2013, Belt & Road is seeking to rebuild China’s ancient silk routes for the 21st century. It looks to build new connections across three continents, with an estimated $4 trillion of investment across 65 countries. It’s cross-border ambition on an unprecedented scale, at a time when globalisation and free trade are under threat elsewhere.
Of course, the project is very much in its infancy. There are geopolitical, developmental and regulatory issues which China will have to confront as it develops stronger economic and infrastructural ties across a diversity of nations. There will also be practical issues the Chinese government will need to address so their considerable investment delivers value. Its own businesses, including many giant state owned enterprises, will need to operate as part of a global supply chain.
That is why this is much more than a story about Chinese foreign policy. Such an ambitious international trade route will only be successful in generating growth if the connected economies collaborate productively with China and each other. Finance teams will have a crucial role to play in helping companies and public sector organisations maintain accurate reporting and regulatory compliance, as well as providing advice on mitigating risk and developing strategies for sustainable growth.
Globally recognised reporting standards in these areas are crucial in encouraging the movement of capital across borders and through to local economies. Rather than challenging international harmonisation of financial markets and standards, China’s deepening links outside its own borders offer an opportunity to reaffirm them.
The demand for professional accountants in countries along the route is a strong indicator of growth prospects as these countries look to facilitate wider economic activity. ACCA has operated in China for nearly thirty years and has a presence in 21 of the countries along the Belt & Road route. It is clear that this global initiative has already created jobs, and opportunities for finance professionals to assist these national economies to expand their capacity.
For companies to maximise the opportunities offered by Belt & Road, they need to start preparing now: planning for access to talent, and thinking about training professionals with the right blend of work-ready skills needed to act as a strategic business leader and trusted adviser. Whilst Belt & Road may echo the ancient world, it is very much a 21st century project where digital and interpersonal excellence will be as important as technical and ethical competency.
For businesses and governments, whether directly or indirectly on the routes, there is an opportunity to use Belt & Road as a catalyst to encourage trade and promote growth, and to restructure their economy. The China-Britain Business Council (CBBC) has already identified opportunities for co-operation along the southern route, while the Chinese Academy of International Trade and Economic Cooperation has provided some research into developing a suitable economic model.
As we enter a period where the UK is reassessing its trading relationships, Belt & Road should be at the forefront of business minds. There will be obvious opportunities for strong UK industries such as construction, engineering and technology. It will also present an opportunity to strengthen ties with historic regional partners in Hong Kong and Singapore.
London is already welcoming larger amounts of overseas investment, such as that provided by Chinese investors for the new £1.7 billion Albert Dock development which Trade Minister Greg Hands officially declared open for construction last week. Belt & Road is likely to offer up larger numbers of similar opportunities.
Even if the Belt & Road initiative does not achieve its ambitions to recreate a modern Silk Road, it marks the fact that east-west trade routes are growing in volumes, and it is likely to open up new markets and opportunities.
As the world’s largest exporter of financial services, we should also consider the role the UK can play in shaping the success of Belt & Road as well as building new diplomatic relations. The expertise and insight of our world-leading financial sector can play a crucial role in building the UK’s influence and ‘soft power’ as Asia continues its emergence as a regional economic powerhouse.
Belt & Road could well be the physical embodiment of a globalised world, introducing trade and services that cut across borders and continents. As many UK businesses know already, trade, technology and talent do not recognise borders.
Government, business and professional bodies need to work together to educate and identify new areas for UK economic growth, and provide the support needed to expand into rapidly developing markets.
Here at ACCA we’re following this ethos of a global, outward-looking approach: opening up access to the profession whilst leading the profession into new territory.
We already work closely with governments and learning providers in Pakistan and Malaysia to facilitate Belt & Road related development. This week, I will be in Shanghai to help launch the first phase of an ongoing research project into how Belt & Road will impact upon business prospects in several countries along the route, including the UK. For the 198,000 professional accountants we represent - working in very sector and industry around the world - we’re keen to make the most of the opportunities Belt & Road will present.
We know that for Britain to be global, it needs to think global and respond to a fast-changing world. If UK government and business is alive to the possibilities, as well as the risks, of the Belt & Road initiative, it may well help to shape the future for ‘global Britain’.
Helen Brand is Chief Executive of ACCA. This article was originally published in CityAM.