How large of an impact has the Belt Road Initiative made on capital markets deals across the world?

Not looking for specifics like companies/amounts/sectors/regions obviously, but wanted to see how many people will share what they've heard about the BRI in their M&A or ECM/DCM deals. Personally as someone working in HK, I hear companies in China, Singapore, HK, Japan, Russia, Africa, Central Asia and Latin America bring up the BRI all the time and even integrate it into guidances and valuations, but I'm not sure how much it has affected North America and Europe so far, since Portugal and Italy signed onto the BRI pretty late. 
 

From what I've seen, the BRI has been a huge deal here in Asia despite coming into existence less than a decade ago. Curious to see what NA/EU bankers have to say, coming from someone working the HK markets.

Comments (7)

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  • Prospect in PE - Growth
Jul 1, 2022 - 4:17pm

The premise of pretty much every argument you make is that China is going to overtake the U.S. in one way or another in the global power landscape, which is a valid argument to propose. What are your views on the current and future gender demographics in China? The CCP seems to be executing the vision of Deng Xiaoping well, but I believe some of their cultural values will end up undermining his plans in the long run. Xiaopings's whole philosophy was that ideological/value driven governing is ineffective for the purpose of scaling China up. What is ironic is that one of his most notable policies, the one child policy, unintentionally created a situation where cultural values superseded the pragmatic purpose of the program. Males now vastly outweigh females in the younger generations. This presents a problem in that reproduction cannot be sustained, and will eventually decline. In 50 years, who will take care of the elders? It's inplausible to say that they will all be put in homes or something of the like because again, taking care of elders is an important value. How does China maintain their tech industry, military, manufacturing, etc. when the average age of citizens is in the late 30s or early 40s? I think this is something important to consider that a lot of people ignore because its not as cool as 6th gen fighter jets or a technological arms race. 

Jul 1, 2022 - 7:51pm
racist wharton chad, what's your opinion? Comment below:

Ok here are my opinions laid out:

1. China has already "overtaken" the US and is on track to practically match the entire developed world in terms of population, GDP, manufacturing, energy output, trade, industry, etc.

2. I believe that China will find a way to increase birth rates in the near future, whether through cultural shifts (subsidizing rural/agrarian regions and careers), hard power (forcibly impregnating women) or advances in technology (artificial wombs). I don't think many people realize it, but the current Chinese government is arguably the most powerful in the world compared to governments over the past several centuries in terms of what they can get away with domestically without civil unrest, going bankrupt or being toppled. From my point of view, as technological solutions to a declining population proves unfeasible or too expensive, the "shortcut" to ensuring population growth would just be to ensure compliance with whatever opposite of a "one child policy" that they enact (something that mandates all fertile women to have at least 3 children by age 35??), instead of sinking money into artificial wombs. Another method would be to open up the country to immigration, but not only would this be ineffective on a country with China's population (as opposed to small countries such as Germany, UK and France using immigration as a stop-gap measure to maintain population growth), but it would require significant cultural changes. However, I could easily see China draining poor, populous countries (Indonesia, Nigeria, Pakistan, Brazil, Ethiopia) of their human capital as they immigrate to China for economic reasons as well as to enjoy a life in a stable country with highly developed infrastructure, service industries and economies of scale.

Jul 1, 2022 - 11:14pm
Sequoia, what's your opinion? Comment below:

Have heard from sophisticated investors that China had locked down Africa. Also quite a few Asian nations 

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Jul 3, 2022 - 4:56pm
ChiefFrivolitiesAnalyst, what's your opinion? Comment below:

No deals to rely on, but a fascinating question. Would be great to hear from:

i) Central Asian project finance monkeys. More things getting of the ground due to presumably larger appetite from Chinese (sovereign) funds and the lower WACC that implies?

ii) Those financing logistics / transport sectors along the BRI. More business being done these days?

iii) those in Trade Finance. Any uptick in demand for letters of credit and such for transport via BRI routes?

Jul 3, 2022 - 11:38pm
ChiefFrivolitiesAnalyst, what's your opinion? Comment below:

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