China’s trillion-dollar Belt and Road Initiative is hailed as the “project of the century” as the world’s second-largest economy looks to take the lead role in globalisation historically held by the West.
Much has been discussed about the political, economic and cultural impact that the initiative could have globally since it was introduced in 2013. However, there has been little attention paid to the infrastructure projects in the making.
FinanceAsia will publish a series about the 10 biggest Belt and Road infrastructure deals that have been signed in the 2018 calendar year, and examines which companies are spearheading and likely benefitting from these projects.
The series follows a similar feature in 2017 where we examined BRI projects that started that year. Click here to revisit the feature.
These projects will be published in descending order based on their estimated project value. We will only include infrastructure deals of more than $1 billion.
5. Marine facilities at King Salman International Complex, Saudi Arabia
Companies involved: Power Construction Corporation of China (PowerChina)
Status: Contracts signed in November 2018
Estimated project value: $3 billion
China’s participation in the construction of Saudi Arabia’s King Salman International Complex underscores its intention to forge closer ties with the world’s largest oil exporter at a time when some of its Western allies have been stepping back.
In November, state-owned Power Construction Corporation of China signed an agreement to build shipbuilding yards and offshore engineering facilities at the King Salman International Complex, a commercial maritime project that was part of Saudi Arabia’s long-term strategy to diversify its economy and reduce its reliance on the oil and gas sector.
Located by the Arabian Gulf in eastern Saudi Arabia, the King Salman International Complex will be the world’s largest shipyard capable of building four offshore drilling platforms and 40 plus vessels every year. It is estimated that it will contribute $17 billion to the local economy, increase the nation’s GDP by about 2.5% and create some 80,000 jobs.
The $3 billion-plus project is the largest ever cash-settled contract PowerChina has ever received.
Saudi Arabia signed the contract with PowerChina in less than two months after it ran into a diplomatic crisis over the death of Jamal Khashoggi, a well-known journalist and critic of the Saudi government. The US, Canada, France and the United Kingdom levied sanctions against 18 Saudi officials after the incident and are considering wider economic sanctions, while Germany, Finland and Denmark have cancelled arm deals with the oil-exporting nation.
Against such a backdrop, it was not surprising to see Saudi Arabia to turn to China for the mega contract. And as one of the main objectives of the Belt and Road initiative, China is also keen to expand its influence in the Middle East through infrastructure investments.
The contract was signed just a year after Saudi Arabia’s King Salman signed $65 billion worth of deals with China during his visit to Beijing in March last year.
President Xi has publicly declared China’s support to Saudi Arabia amid the international outcry over the Khashoggi murder – a clear sign Beijing is seizing the opportunity to cement closer ties with the kingdom. PowerChina’s contract clearly follows that strategy.
