China, Securing “Belt and Road Initiative”: Risk Management

Abstract

China’s Belt and Road Initiative aims to promote economic development and exchange with China for more than 60 countries. The initiative will further strengthen China’s global influence, help secure more natural resources for China and ease the domestic overcapacity of some manufacturing segments in China such as steel and power generation.

China’s international expansion can be categorized into three aspects. First, in terms of trade, China started exports mainly since its adoption of the open-door policy in the late 1970s, and became the largest trading nation in 2012. Second, is construction; China has become a major player in the global construction community according to revenue and according to the Engineering News-Record (ENR) (ENR250 2015, 2016 (www.enr.com)). Third, is investment; China has become the second largest nation of outbound direct investment in 2016.

Both foreign construction project contracting and foreign direct investment are at the core of the Belt and Road Initiative. The Initiative will be successful only if it is undertaken with appropriate risk management to deal with various risks resulting from the significant differences between China and Belt and Road countries in politics, economy, culture, legislation and governance.

In this chapter, these risks will be addressed under the framework of risk management, which is a dynamic process involving namely risk identification, risk assessment, risk reduction and risk transfer and retention.