The outcome is that many of the projects in such countries which are looking to

The outcome is that many of the projects in such

This preview shows page 12 - 14 out of 20 pages.

region. The outcome is that many of the projects in such countries which are looking to fill their infrastructure gaps are now looking for equity investments of the kind which the PPP model strongly supports and which the OBOR strategy will encourage. This is obviously a move away from the traditional procurement methods which used to see the engagement of Chinese enterprise exclusively for their construction capabilities.
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11 2. Investment through equity interests - The Chinese government is now aggressively advocating as well as encouraging outbound investment in the form of equity stakes in assets and projects across the world. A leading example of this is in the agriculture sector. Where China previously would rely on importing food products at market prices to feed its huge population, but now has realized that it makes far more strategic sense to simply acquire agriculture assets in foreign lands and operate them themselves. But with this it is effectively annexing the farm land of other countries as part of its own agriculture sector. The OBOR strategy and PPP model complement each other considerably in this respect. 3. Legal impediments - In most of the countries along the Silk Route the mandatory position for one reason or another is for the host nation to have ownership of its own infrastructure. Without the resources, the PPP model is an only choice for them to meet their infrastructure needs without giving up the rights they wish to retain. They can attract foreign know-how and investment while maintaining ownership by awarding a concession. In certain regions such as, parts of the Middle East and Africa are now seeing that PPP laws and regulations are being implemented and developed in order to support and facilitate the PPP model. In some cases, the legal impediments are being broken down in a way that supports the utilization of the PPP structure. This will, in turn, support OBOR growth. 4. Joint Ventures - PPPs are now one of the most convenient and workable project models for contractors who are looking to get into joint ventures with foreign entities. In recent times, Chinese enterprises are looking to commit to countries beyond just contracting work and are now looking to invest with, and in, the nations which are looking to them for their expertise. By becoming a partner to governments, rather than just an employee, there is scope for significant mutual benefits. Governments are seeking investors who are willing to commit to their countries for longer terms, and Chinese enterprises are looking to become part of the decision-making process rather than being hindered by it as they historically have been in some countries. PPPs strongly support these objectives. Even though there is a possibility that doing business in partnership with host governments can increase risk-sharing on the part of the private, the goal is that in the long run through constructive collaboration, these risks can be reduced across the board for both partners.
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  • Fall '19
  • jane smith
  • People's Republic of China, OBOR

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