Belt and road gateway: Hong Kong has pivotal role to play in exporting Chinese influence around world

Beijing’s global trade and economic strategy, the “Belt and Road Initiative”, has generated a great deal of scepticism – and has suffered from a lack of clarity over what it will deliver and who will benefit from it. The initiative is part of a drive by China to export goods, services and influence across Asia, Eurasia, Africa and the Middle East. So where does Hong Kong fit into this?

“One of the key challenges faced by the initiative is the lack of financing. A number of studies have highlighted the huge shortage in funding for belt and road infrastructure projects,” says Ayesha Lau, managing partner in Hong Kong, KPMG China. “As an international financial centre, Hong Kong can play a pivotal role in plugging this gap as it offers diversified financing channels.”

As a dominant offshore renminbi centre, Hong Kong is a gateway for mainland China’s external investment. “Hong Kong is well-qualified to provide a platform for developing multiple channels for funding. Its financial community will benefit from the further internationalisation of the yuan and all the associated yuan and treasury business,” says Mabel Chan, president of the Hong Kong Institute of Certified Public Accountants.

“The city possesses the high-end professional services needed to advise on Belt and Road projects such as project planning and development, M&A [mergers and acquisitions] financial structuring and due diligence, legal and dispute resolution, construction engineering and project management,” Lau says.

“We also have the required talent pool needed to advise governments on project structuring in order to make them commercially feasible or to assist private investors to bid for and operate projects.”

Aside from the funding angle, infrastructure will require parties with the correct experience, including roads, bridges, railways and underground railways. “In the early stages, infrastructure development will require investment and project contracting, areas where Hong Kong has a lot of experience,” Chan says. “Later, as trade and business develops along the various belt and road corridors, companies will require tax planning, auditing, financial management, governance and risk management, advice on use of capital, and many other commercial consultancy services from professional accountants who are also business advisers.”