Big-ticket projects call for cautious approach for Chinese firms

By Hu Weijia Source:Global Times Published: 2019/3/11 21:03:41

Big-ticket projects call for cautious approach

A general city view of Helsinki, Finland, where the tunnel is to start File photo: VCG

Chinese enterprises should be cautious and prudent when they show an interest in financing the world's longest undersea railway tunnel, which will connect Finland and Estonia across the Gulf of Finland, a gateway for maritime transportation of Russia's western region.

Finest Bay Area Development Oy said it has signed a memorandum of understanding with China's Touchstone Capital Partners for 15 billion euros ($16.8 billion) in financing for the project. 

According to Touchstone's website, the privately owned group has "a close relationship with several Chinese state-owned enterprises and international leading groups."

The planned tunnel between Helsinki and Tallinn will promote economic integration among the Baltic States and other EU countries such as Finland. Estonia was part of the Soviet Union and declared independence from the Soviet Union in 1991. The Baltic country joined the EU in 2004.  To its east lies Russia, while the Gulf of Finland lies to the north. As for the EU, it to some extent views Estonia as a frontier through which it can squeeze Russia's strategic space. 

The EU has always wanted to stimulate economic growth in the Baltic States of Estonia, Latvia and Lithuania, so it can form a buffer zone and strategic shield between Russia's western border and EU members. 

It will be a sorrowful outcome for the developers of the undersea railway tunnel if Russia and the EU engage in strategic confrontation over the project. The geopolitical risks will add uncertainty to the tunnel and lead to possible losses in its business.

Some infrastructure projects along the routes of the China-proposed Belt and Road Initiative (BRI) have been suspended due to those countries' unstable political situations and complex geopolitical environments, resulting in big losses for Chinese enterprises. We need to draw lessons from those projects.

With a total population of about 1.3 million people, Estonia is reportedly the 76th-largest export economy in the world. Although Touchstone has extensive experience in financing large private infrastructure projects, in the short term, it will not be easy to make profits from building the tunnel to serve such a small economy.

This does not mean Chinese enterprises shouldn't get involved, but they need to take a cautious approach to the business risks and ensure a reasonable return on investment. 

The tunnel is a long-term project and its implementation calls for patience and effective measures to cope with various challenges. 

Besides major projects such as this tunnel, with its aura as the world's longest such structure, Chinese companies should give more attention to projects that can bring tangible benefits to the local economies and local ordinary people. 

With the BRI, China should be more aggressive in seeking cooperation with its neighboring countries, especially Southeast Asian nations, to boost economic growth in the areas surrounding China. 

There is a wide infrastructure funding gap in the region, and a relatively stable regional environment will ensure the sustainable development of the BRI and help promote economic integration.

The author is a reporter with the Global Times.
Newspaper headline: Big-ticket projects call for cautious approach

Posted in: ECONOMY

blog comments powered by Disqus