NZ ahead of the game (again) in signing up to China's multi-billion dollar plan. But what are the risks?

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Taking the high speed train from Shanghai to Beijing to attend President Xi Jinping's Silk Road forum was a very apt reminder of just how good China has become at building big infrastructure projects over the last couple of decades.

This thing fair hummed along at just over 300 kilometres an hour. The trip was done in four hours, a far cry from the 20 hours it used to take.

China's Premier has confirmed the superpower will start upgrading the deal next month.
Source: 1 NEWS

It's this type of large scale infrastructure expertise that China is now effectively offering up to the world via its new plan to create a 21st Century version of the ancient Silk Road trading routes that connected China to the west.  

The new plan announced by President Xi in 2013 is called One Belt One Road and is made up of an overland rail and road trade route connecting China to Europe and a maritime silk road connecting China to Europe, South-East Asia and beyond.

What China is hoping to do under this plan is encourage its neighbours and other countries that are on the trade routes to partner with it in building billions of dollars' worth of new roads, bridges, ports and high speed trains.

If it works, who knows one day there may be a bullet train from Shanghai to London?

Source: 1 NEWS

The theory is that in doing so China can find ways to put some of its spare construction and infrastructure capacity to better use, while at the same time improving supply lines, boosting global trade and globalisation.

The plan has already got buy-in from dozens of countries, particularly nearby developing nations, with billions for example having already been spent by China on a transport corridor in Pakistan.

Developed nations have however been less enthusiastic, and that's where New Zealand comes in.

Despite being a long way from the core trade routes proposed by China’s Belt and Road initiative, New Zealand last month became the first developed nation to sign up to it.

Local authorities have confirmed an agreement is just weeks from being signed off, but not everyone is happy about it.
Source: 1 NEWS

Under a new Memorandum of Understanding, both countries will now work over the next 18 months to find ways that they can work together under the plan.

That could mean Chinese investment in New Zealand infrastructure projects, likewise it could mean New Zealand firms being part of the many projects closer to China.

It's not really clear yet.

It will be interesting to see what concrete commitments there are. Commentators I've spoken to here in China see it more as a symbolic gesture of goodwill support to China by New Zealand than anything else.

So a continuation of the 'firsts' we've signed with China. Remember we were the first Western nation to do an FTA, the first to sign up China's version of the World Bank, the AIIB.

It's an interesting move to back Belt and Road because our closest neighbour Australia, for example, has so far declined to be involved.

Australia, which is a formal ally of the US, is perhaps more sympathetic or attuned to Western critics of Belt and Road who view it as less an economic trade vision for the world and more an attempt by China to exert its political influence through economic means.

It's that type of scepticism that President Xi will want to combat when he hosts this weekend's forum in Beijing. 

Expect to hear plenty about how China is committed to co-operation and development not competition. How it's China that is committed to Globalisation and is stepping into the breach as the US turns inward.

The meeting will be attended by 28 world leaders including Russia's President Vladimir Putin, along with the heads of the UN and IMF.

It's a big deal. As of Friday however the US was yet to say if they were sending a representative.

It's hoped the links will drive opportunities for both countries in the film and screen spaces.
Source: 1 NEWS

New Zealand will have a government representative there in Tertiary Education and Skills, Science and Innovation Minister Paul Goldsmith.

I'll be reporting on the forum for 1 NEWS over the weekend.

In doing so I hope to get a better understanding of why New Zealand has chosen to get involved. What do we stand to gain and what are the risks?

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