Belt and Road Projects: How Investors Can Safeguard Against Risks

December 03, 2021 | BY

Hugo Yeung

BRI projects face a multiplicity of issues from procurement to implementation. Investors must thoroughly understand and mitigate risks associated with BRI ventures.

Credit: sirisakboakaew/Adobe Stock

Summary

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  • Political instability in a host nation can wipe out Belt & Road projects so carrying appropriate insurance is critical
  • Complex legal and compliance considerations are at play, including local laws and international sanctions
  • Belt & Road projects face commercial risks common to all cross-border infrastructure projects
  • Investor-host and Chinese-international cultural differences need to be bridged

The Belt and Road Initiative (BRI) is a landmark infrastructure project launched in 2013 by China's president, Xi Jinping, which aims to provide trillions of dollars worth of transportation, energy, and telecommunications infrastructure to its 143 host countries and 32 participating international organizations as of November 29, 2021. A large number of BRI projects adopt a public-private partnership (PPP) model involving a concession agreement whereby the host government grants the project company the rights to develop, operate, and generate revenue from the project during a specified concession period to recoup costs incurred during development. This article discusses the primary risks and difficulties facing Chinese investors involved in BRI projects and potential methods to mitigate against them.

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