78 Asian Steel Watch

Soon after Xi Jinping was sworn in as General

Secretary of the Communist Party of China in

November 2012, he unveiled the vision known

as the “Chinese Dream.” Xi’s Chinese Dream is

characterized by achieving the so-called “Two

100s”: China becoming a moderately well-off so-

ciety with per capita GDP of over USD 10,000 by

2021, the 100th anniversary of the founding of

the Chinese Communist Party, and China becom-

ing a fully developed country by about 2049, the

100th anniversary of the founding of the People’s

Republic of China.

In order to realize this dream, various policies

are being implemented, including the “One Belt,

One Road (OBOR)” initiative, a three-stage plan

to sophisticate China’s industrial structure (Made

in China 2025 Manufacturing giant 2035

Innovation power 2049), and the “Internet Plus”

action plan. OBOR is designed to provide a cat-

alyst for the “reform and opening-up 2.0” being

driven by President Xi.

The “reform and opening-up 1.0” period took

place over the last 30 years. Beginning with four

small special economic zones (SEZ) in southern

China in the late 1970s, then-President Deng Xia-

oping eventually opened 14 coastal cities and the

entire Pearl River Delta to foreign investment in

the 1980s. Deng formulated a three-stage devel-

opment plan which aimed to open a part of China

to all of China (dot line plane). The next Pres-

ident, Jiang Zemin, followed in the footsteps of

his predecessor by developing the Yangtze River

Delta in the 1990s. In the 2000s, President Hu

Jintao implemented the Grand Western Devel-

opment Program, the Northeast Revitalization

Plan, and the Rise of Central China Plan. As these

examples show, China’s reform and opening has

expanded from south to north, and from the

Eastern China to the Western Central China re-

gion.

Unlike his predecessors, who focused on do-

mestic development, President Xi is attempting

to connect the developed eastern coastal regions

and the less-developed central western regions to

the outside world by both land and sea. In doing

so, he is seeking to address regional imbalances,

Chinese Steel Moves along the One Belt, One Road Dr. Chang-do Kim Senior Principal Researcher POSCO Research Institute jincd@posri.re.kr

Featured Articles

Vol.03 June 2017 79

ease overcapacity, and encourage local companies

to expand overseas. While Deng’s reform and

opening-up policies fueled domestic development

introducing advanced foreign technology and

experience, Xi’s OBOR seeks to apply China’s ac-

cumulated know-how in rapid growth to pioneer

overseas markets and expand its clout within the

global community. During this process, China’s

reform and opening policies have been upgraded

in terms of quality.

When President Xi un-

veiled the concept of a

“New Silk Road” during

a visit to Central and

Southeast Asia in Sep-

tember and October

2013, it was generally

accepted as more of a dream than a vision. There

seemed to be a low likelihood of connecting Asia,

Africa, and Europe along the former Silk Road

through an economic belt.

However, Chinese leaders have since pursued

internal measures to create new policies to realize

OBOR, and externally they took advantage of

summit meetings to persuade leaders in other

countries to participate in the initiative. Thank

to such efforts, the Chinese government began

to actualize this “New Silk Road” and announced

OBOR in March 2015. “One Belt” refers to the

land-based “Silk Road Economic Belt” and “One

Road” describes an oceangoing 21st century

“Maritime Silk Road.” The initiative aims to rein-

vigorate the overland Silk Road first established

during the Han Dynasty (BC 206-220) and the

maritime Silk Road that emerged during the

Ming Dynasty (1368-1644) with a view to con-

solidating the development demand in Eurasian

countries and establishing collaborative net-

works.

The OBOR initiative as envisioned by the

Chinese government directly or indirectly con-

nects 65 countries with a combined population

of 4.4 billion people. This accounts for 63% of the

world’s population, and their total economic out-

put of about USD 21 trillion represents roughly

OBOR, the key of “Reform and Opening-up 2.0”for realizing the “Chinese Dream”

Chinese Steel Moves along the One Belt, One Road

Source: Compiled from the Chinese government and media reports

One Road: 21st Century Maritime Silk Road

One Belt: New Silk Road Economic Belt

NetherlandsRussia

Turkey

IranGreece

Kenya

Sri Lank

India

Indonesia

UzbekistanKazakhstan

Reform and Opening 2.0

The concept of “New Silk Road”unveiled by President Xi

(September-October 2013)

Contributing to theSilk Road Fund

(USD 40 billion, December 2014)

The vision of OBOR released bythe Chinese government

(March 2015)

Figure 1. National Development Policies in China and Vision of OBOR Economic Zone

NortheastRevitalization Plan(2003)

Development of Beijing, Tianjin and Bohai Bay (2000s)

Development of Yangtze River Delta (1990s)

Development of the Pearl River Delta (1980s)

Grand WesternDevelopmentProgram (2001)

Rise of CentralChina Plan (2006)

80 Asian Steel Watch

29% of the total global economy. To allow the

economic linkage of this vast area, China has set

five major goals for OBOR: policy coordination,

facility connectivity, unimpeded trade, financial

integration, and people-to-people bonds. These

goals aim to reduce trade and investment barriers

through the development and connection of in-

frastructure in neighboring OBOR countries.

China has contributed USD 40 billion to a

Silk Road Fund to finance OBOR and established

the Asian Infrastructure Investment Bank (AIIB)

with an initial USD 100 billion in capital. The

AIIB welcomed 57 founding members in March

2015, and at the first annual meeting in June

2016 approved USD 509 million in investment in

its first four projects, including highway construc-

tion in Pakistan and Tajikistan. Using this as its

financing method, the OBOR project has become

a more realistic plan.

T he land-based Si lk

Road branches into

three routes: the North

Line which starts in Bei-

jing and crosses Russia

and Germany to reach

Northern Europe; the

Middle Line which ranges from Beijing to XiAn,

Afghanistan, and eventually Paris; and the South

Line which links from Beijing to Pakistan, Iran,

Featured Articles

Linking transnational economic corridors and constructing industrial complexesand new cities

Table 1. OBOR’s Five Major Goals

Goals Details

Policy coordination

Communication Inter-governmental communication regarding respective economic development strategiesMacro-policy exchanges Inter-governmental policy connection; joint formulation of collaboration methodsSupport for cooperation Providing policy support for the implementation of practical cooperation and large-scale projects

Facility connectivity

Transport Linking disconnected roadways; alleviating transport bottlenecks; and improving road network linkagesEnergy Constructing cross-border power supply networks; cooperating on regional power grid upgrade and transformationCommunications Installing cross-border optical communications cables and undersea optical cables to connect continents

Unimpeded trade

Convenience Removing investment and trade barriers; reducing clearance costs; improving customs proceduresBalance Finding new growth engines for trade; promoting balanced trade; expanding the scope of mutual investment Encouragement Encouraging OBOR nations to invest in China and Chinese companies to invest in infrastructure construction in OBOR nations

Financial integration

Currency settlement Expanding the scope and scale of currency swaps and settlementFinancial cooperation Seeking cooperation between related nations through a special financial institution under the Shanghai Cooperation Organization (SCO)Financial funding Jointly establishing the AIIB and the New Development Bank; expediting the creation and operation of the Silk Road FundBonds Issuing yuan-denominated bonds by related countries and by companies with high credit ratings inside China; issuing bonds of Chinese financial institutions and companies in yuan and foreign currencies outside China

People-to-people bonds

Cultural training Annually providing 10,000 government scholarships in countries along OBOR; jointly applying for inscription as UNESCO World Cultural Heritage sites; simplifying visa processes in related OBOR countries; conducting a project for maritime Silk Road cruise linersMedical care Enhancing joint responses to public medical accidents; providing medical relief and aid; expanding cooperation in traditional medicine Science and technology Constructing a joint research center, international technology transfer center, and maritime collaboration center

Source: Vision and Actions on Jointly Building the Silk Road Economic Belt and 21st Century Maritime Silk Road, National Development and Reform Commission (NDRC) of China, Chinese Ministry of Foreign Affairs, and Chinese Ministry of Commerce, March 28, 2015

Vol.03 June 2017 81

Turkey, and finally Spain. By examining its OBOR

policies, China can be seen to have been focusing

on connecting infrastructure facilities along the

land-based Silk Road.

China is currently constructing six trans-

national economic corridors in border areas: a

China-Mongolia-Russia corridor; a new Eurasian

land bridge of freight trains; a China-Central

Asia-West Asia corridor; a China-Pakistan corri-

dor; a Bangladesh-China-India-Myanmar corri-

dor; and a China-Indochina Peninsula corridor.

The Pakistan corridor is particularly meaningful

since it not only connects infrastructure between

the two countries, but also creates industrial

complexes along the route. This example clearly

illustrates how the OBOR infrastructure project

will be followed by the construction of industrial

complexes and new population centers in the

OBOR nations and their vicinities.

On May 14-15, 2017,

the Chinese government

h e l d a m a j o r OB OR

summit in Beijing, par-

ticipated by 29 foreign

heads of states and

governments, to spur

the implementation of the initiative. The AIIB ex-

pects an additional 25 members to join this year.

There are several reasons why OBOR is rapidly

developing both internally and externally.

On the external front, first the US strategy of

The accelerating OBOR project

Figure 2. OBOR’s Six Transnational Economic Corridors

Source: Compiled from the Chinese government and media reports

• Connected with Russia’s “Trans-Eurasian Belt Development (TEPR)” and Mongolia’s

“Steppe Road” projects• Agreed during the trilateral summit among China,

Mongolia, and Russia (September 2014)• Lifted to the international strategic project (January 2015) • NDRC released the “China-Mongolia-Russia Economic

Corridor Plan” and designated seven cooperation areas, including infrastructure consotruction (September 2016)

• A 2,800-km network of roads and railways• Implementation accelerated following President Xi’s

visit to India (September 2014) and Prime Minister Modi’s visit to China (May 2015)

• A 10,900-km railway network to link from Lianyungang in China to Rotterdam in the Netherlands

• Related to about 30 countries

• Aims to expand logistics, financial and information exchanges with countries in the region and boost local cooperation by linking roads and railways

China-Mongolia-Russia Corridor

Bangladesh-China-India-Myanmar Corridor

Construction of New Eurasian Land Bridge

China-Indochina Peninsula Corridor

Moscow Irkutsk

Ulaanbaatar

Gwadar Port

New DelhiKolkatai

Dhaka Hanoi

Bangkok

Singapore

Nanning

Russia

Beijing

Shenzhen

Kunming

Kuala Lumpur

China-Central Asia-West Asia Corridor• An oil and natural gas pipeline connecting

Xinjiang to the Persian Gulf, the Mediterranean coast and the Arabian Peninsula

• Lines A, B and C between China and Central Asia (in operation) and line D between Turkmenistan and Xinjiang Uyghur

Chinese Steel Moves along the One Belt, One Road

China-Pakistan Corridor

• More than 30 MoUs signed during President Xi’s visit to Pakistan (April 20, 2013)

• A USD 46 billion project to build a 3000-km network of roads, railways, pipelines to transport oil and gas, fiber cables, and industrial complexes from Pakistan’s Gwadar Port to Kashgar City in Xinjiang to be scheduled by 2020

82 Asian Steel Watch

a “pivot to Asia” has been suspended. Last Janu-

ary, President Donald Trump signed an executive

order formally halting US participation in the

Trans-Pacific Partnership (TPP) and demonstrat-

ed his intention to focus on domestic issues. The

OBOR project will accelerate in the absence of US

restraints on China.

Next, the countries linked through OBOR

feature high growth potential. More than half of

the 65 countries under the OBOR initiative are

developing countries with a per capita GDP below

USD 10,000 and have been driving rapid growth

in their respective regions. Since the 2000s, the

OBOR countries’ GDP growth rates have sur-

passed the global average. According to the World

Bank, the average GDP growth rate of OBOR

countries from 2000 to 2010 was 6.7%, surpass-

ing the global average by 3.9%p. During this pe-

riod, their annual average growth rates in trade

and FDI were 18.9% and 14.8%, respectively, far

higher than the global means of 1.5% and 9.0%.

Even since 2011, economic development along

the OBOR routes have shown a similar trajectory.

China is clearly attempting to accelerate the imple-

mentation of OBOR in order to reap the benefits

of the high growth potential in these regions.

On the internal front, first the Chinese gov-

ernment hopes to strike a balance in its regional

development by connecting developed eastern

China with less-developed central and western

China, and eventually to areas overseas. In some

eastern provinces, GDP per capita is three times

higher than that recorded in central and western

provinces. The OBOR project needs to be expedit-

ed in order to swiftly address such regional imbal-

ances.

Second, China is helping domestic companies

pursue foreign expansion into neighboring OBOR

countries by linking infrastructure with them.

In doing so, it hopes to address domestic overca-

pacity. The operation rate of Chinese industries

experiencing overcapacity stands at only around

60-70%. It is desperate for them to seek overseas

expansion.

Third, China is attempting to diversify the

routes for the transport of resources through

The Chinese steel industry has begun to search for a way forward

through OBOR for the following reasons. Projections for expanded steel

consumption based on OBOR are impressive; and steel demand should

further expand if OBOR countries expedite related development.

Featured Articles

Vol.03 June 2017 83

OBOR. As the Chinese economy expands, its de-

pendence on oil imports has been growing. About

80% of China’s oil imports pass through the

Strait of Malacca and the South China Sea, which

creates geographic concerns due to its vulnerabil-

ity to a US blockade. Therefore, in order to reduce

its dependence on these routes, China is seeking

to develop alternatives along the OBOR routes,

such as the Myanmar-China pipelines.

As Chinese economic growth slows, the gov-

ernment is working hard to identify new growth

engines. Given the high expectations for OBOR,

the country is expediting investment and de-

velopment in the OBOR region. According to

the Chinese Ministry of Commerce, Chinese

companies had established 56 economic zones

among OBOR countries by the end of 2016, with

an accumulated investment of USD 18.5 billion.

China’s trade with OBOR countries totaled USD

3.1 trillion for the last three years, accounting for

26% of total trade. If infrastructure connectivity

in this region increases, trade will rise as well.

During the initial peri-

od of reform and open-

ing-up (1978-2012), the

Chinese steel industry

grew quickly, bor ne

along by the country’s

rapid economic growth

and local governments’ competing investments.

China’s crude steel production was a mere 37.12

Mt in 1980, but had surged to 101.24 Mt by

1996, 222.34 Mt by 2003 and 512.34 Mt by

2008, finally peaking at 822.7 Mt in 2014. Its

compounded annual growth rate was 9.5% from

1980 to 2014. However, the Chinese steel indus-

try has been suffering severe aftereffects of this

accelerated growth: falling steel consumption

following the economic slowdown that has tak-

en place since 2014; prolonged oversupply with

declining steel prices; and suspension of facility

operations and a rising number of bankruptcies

stemming from the spike in financial, environ-

mental, and labor costs.

Under such circumstances, the Chinese steel

industry has begun to search for a way forward

through OBOR for the following reasons. First,

projections for expanded steel consumption based

on OBOR are impressive. Steel consumption is ex-

Chinese steel moves along the OBOR routes

(1,000 tonnes, kg)

Country Apparent Steel Use1

Apparent Steel Use per Capita2 Exports3 Imports4 Net

Imports

Kazakhstan 2,943 167 1,705 505 -1,200

Russia 44,578 311 29,702 4,364 -25,338

Ukraine 3,823 85 17,721 804 -16,917

Uzbekistan 1,842 62 17 1,160 1,143

Bangladesh 4,209 26 5 3,967 3,962

India 89,353 68 7,563 13,284 5,721

Indonesia 13,656 53 2,003 11,413 9,410

Malaysia 11,629 383 1,823 7,816 5,993

Myanmar 2,605 48 2 2,420 2,418

Pakistan 7,087 38 53 3,411 3,358

Philippines 10,186 101 107 7,282 7,175

Singapore 5,100 910 1,729 5,180 3,451

Sri Lanka 1,028 50 1 951 950

Thailand 19,458 286 1,254 14,628 13,374

Viet Nam 21,226 227 1,512 16,343 14,831

Japan 67,800 536 40,804 5,918 -34,886

South Korea 58,125 1,156 31,173 21,674 -9,499

China 700,350 509 111,556 13,178 -98,378

Table 2. China and OBOR Nations’ Steel Use, Imports, and Exports (2015)

Note: 1) Crude steel equivalent, 2) kg crude steel, 3) & 4) Semi-finished and finished steel productsSource: worldsteel

Chinese Steel Moves along the One Belt, One Road

84 Asian Steel Watch

pected to increase by 30 Mt annually simply for the

transportation and infrastructure projects draw-

ing on central and local government investment.

Moreover, steel demand should further expand if

OBOR countries expedite related development.

Therefore, the Chinese steel industry has been

actively working on rationalizing distribution,

improving competitiveness, and accelerating

foreign investment under the OBOR initiative.

Steelmakers in Western Central China, including

JISCO and Panzhihua Iron and Steel, are finding

themselves playing a greater role and growing in

Featured Articles

Country/Region 2016 2015 2014 2013 2013-2016 CAGR(%)Group Country/Region Export Share (%) Export Share (%)

Major Area Asia 81,944 75.2 79,652 64,471 42,611 68.4 24.4

Europe 7,650 7.0 9,555 7,550 5,066 8.1 14.7

North America 1,894 1.7 3,334 4,512 2,804 4.5 -12.3

Latin America 7,806 7.2 9,574 9,552 6,485 10.4 6.4

Africa 8,844 8.1 9,437 6,912 4,717 7.6 23.3

Oceania 836 0.8 852 793 651 1.0 8.7

World 108,990 100 112,405 93,790 62,340 100 20.5

Asia Taiwan 2,526 2.3 2,502 2,823 1,561 2.5 17.4

India 3,330 3.1 4,762 3,798 1,646 2.6 26.5

Japan 1,263 1.2 1,328 1,567 772 1.2 17.8

Pakistan 2,925 2.7 2,556 1,461 795 1.3 54.4

Korea 14,350 13.2 13,496 12,969 9,724 15.6 13.8

Indonesia 5,839 5.4 5,105 3,402 2,248 3.6 37.5

Malaysia 3,350 3.1 3,312 2,484 1,808 2.9 22.8

Thailand 6,234 5.7 4,730 3,692 2,862 4.6 29.6

Vietnam 11,704 10.7 10,148 6,628 3,867 6.2 44.7

Singapore 2,970 2.7 3,226 3,215 2,935 4.7 0.4

Philippines 6,544 6.0 5,609 4,779 2,446 3.9 38.8

Cambodia 109 0.1 63 56 55 0.1 25.6

Laos 88 0.1 74 64 28 0.0 46.0

Myanmar 2,109 1.9 2,173 1,908 1,078 1.7 25.1

Brunei 145 0.1 136 85 98 0.2 14.1

CIS Russia 717 0.7 634 886 978 1.6 -9.8

Uzbekistan 270 0.2 249 383 457 0.7 -16.1

Ukraine 279 0.3 168 239 327 0.5 -5.2

Kazakhstan 239 0.2 239 308 513 0.8 -22.4

Kyrgyzstan 65 0.1 60 77 80 0.1 -6.8

Eastern Europe/ME/Africa

Turkey 2,104 1.9 3,060 1,283 577 0.9 53.9

Poland 238 0.2 159 161 106 0.2 30.9

Saudi Arabia 3,122 2.9 2,658 2,318 1,255 2.0 35.5

UAE 2,027 1.9 2,354 1,996 1,156 1.9 20.6

Iran 1,539 1.4 2,109 1,490 888 1.4 20.1

Qatar 178 0.2 167 137 83 0.1 28.8

Egypt 1,554 1.4 1,537 1,034 309 0.5 71.3

Source: Compiled by the author based on CEIC data

Table 3. China’s Steel Exports to Neighboring Countries (1,000 tonnes)

Vol.03 June 2017 85

importance since this western central area is the

starting point for the overland Silk Road. It is

crucial to increase the competitiveness of steel-

makers in this area in order to satisfy surging

steel demand in the region and penetrate into

neighboring foreign markets. To this end, the Chi-

nese government is sparing no effort in providing

related policies and funding.

Steelmakers in the Eastern and Northeastern

regions, such as Baowu Steel, Hebei Steel, and

Ansteel, are currently emphasizing strengthening

the competitiveness of steel mills in coastal areas.

By doing so, they are hoping to penetrate into

countries with high growth potential along the

maritime Silk Road. China is especially interested

in nations along this water route with high po-

tential for steel consumption or imports—India,

Thailand, Indonesia, Vietnam, Pakistan, and Ban-

gladesh, among others.

Second, over the recent few years Chinese

steel exports have been focused on the OBOR

nations. Since becoming a net steel exporter with

43 Mt in 2006 (import, 18.51 Mt), China’s steel

exports have continued to grow. Gross exports

hit a record high of 112.41 Mt and net exports

reached 99.37 Mt in 2015. Last year, steel ex-

ports surpassed 100 Mt. The type of steel prod-

ucts exported has been increasingly shifting from

low-grade steel products, such as long products,

to high-grade types, including flat products.

China’s major steel export destinations in-

clude South Korea and Southeast Asia. If the

OBOR project is accelerated and Chinese steel

competitiveness improves, steel exports to other

countries/areas, including India, Pakistan, and

the Middle East, will increase.

Lastly, if infrastructure connectivity with

OBOR nations improves, China is positively con-

sidering investing in nations with high growth

potential for steel. Since 1990, the accumulated

number of Chinese FDI cases in the steel industry

has surpassed 70, including 20 in the last three

years alone. This illustrates how the Chinese steel

industry is ramping up its foreign expansion. The

major current investment destination is South-

east Asia as part of efforts to create export hubs

and build service centers in key markets. The

nation’s foreign expansion still focuses on long

products. Additionally, it aims to address domes-

tic overcapacity and avoid environmental and

financial restrictions.

However, the focus of China’s OBOR expan-

sion will increasingly shift to flat products and

investment in foreign markets. After securing a

bridgehead in foreign markets, China is expected

to expand the value chain. This is line with the

overall OBOR process of constructing infrastruc-

ture in neighboring countries establishing ba-

sic industries creating industrial complexes

building new cities.

Deng Xiaoping initiated

“Reform and Opening up

1.0” in 1978, whereas Xi

Jinping has envisioned

his “Reform and Open-

ing up 2.0” in the form of

the OBOR project. While

this second phase will be implemented over the

next 30 years, the success of the project is directly

Chinese Steel Moves along the One Belt, One Road

How much will OBOR change the future of the Chinese steel industry?

86 Asian Steel Watch

linked to the future of the Chinese steel industry.

For OBOR to thrive, China needs to address

the following issues. First, the OBOR nations in

which China has the greatest interest are for the

most part developing countries with high-risk

business environments, including rampant cor-

ruption, inadequate legal systems, and unclear

policies. Second, advanced countries such as

the USA and European nations will increasingly

seek to rein in China during the implementation

of OBOR. China must work to minimize con-

flicts with these countries. Third, China needs

to reduce OBOR nations’ local antipathy to its

massive exports and investments. If China sim-

ply pursues its own interests without any ap-

parent benefits in the local communities, OBOR

cannot succeed. Fourth, Chinese companies

need to accumulate experience in foreign entry.

It has only been two to three years since China’s

foreign expansion began to take off; therefore,

the country needs to continue to amass know-

how in foreign expansion and strengthen local-

ized management.

If China properly addresses the above issues

and successfully pursues the OBOR project, its

steel industry will face a markedly different future.

Featured Articles

Company Announcement Country of Investment Details of Investment

NISCO Mar. 2014 Indonesia Construction of JV producing wire rod and bar (with Gunung Gahapi)

WISCO Mar. 2014 Indonesia Construction of JV integrated steel mill (US$ 5 bil.)

DeLong Group May 2014 Thailand Investment in HR strip mill (annual capacity of 0.6 Mt)

June 2014 Malaysia Signing of MoU with local company Perak on ISM producing flat products (3 Mt)

Panhua Group June 2014 Philippines Plan to build a pre-painted steel mill

SIPG July 2014 Malaysia Groundbreaking for steel PJT (3.5 Mt)

Kunming Steel Sep. 2014 Vietnam Operation of JV with VN Steel (annual capacity of 0.5 Mt)

WISCO Nov. 2014 India Establishment of electrical sheet service center

Tsingshan Steel Nov. 2014 Indonesia Building of nickel smelter plant JV

June 2015 Indonesia Signing on flat stainless steel project (3 Mt)

Shougang Jan. 2015 Malaysia Completion of first BF (0.7 Mt) of integrated steel mill (ISM) project (Total 3 Mt)

Magang Mar. 2015 Kazakhstan Signing of MoU on steel PJT (1 Mt)

China Venture May 2015 Malaysia Plan to acquire stainless production line (RMB 400 mil.)

Ansteel July 2015 Indonesia Consideration of building new ISM (5 Mt)

Hebei Steel Apr. 2016 Serbia Acquisition of iron ore mine with 270 Mt reserves (‘14); the Hebei Provincial Government approved ISM PJT (5 Mt) using this mine; acquisition of Smederevo mill in Serbia

JISCO July 2016 Jamaica Acquisition of Jamaican aluminum processing plant from Russia’s lUS RUSAL

WenAn Steel Aug. 2016 Malaysia Signing of MoU on building 5 Mt ISM

Source: Compiled from Mysteel and media reports

Table 4. Chinese Steel Investment in OBOR Nations (Including Plans)

Vol.03 June 2017 87

First, China can realign its steel industry

on the domestic and foreign levels through the

OBOR project, leading to maximized efficiency

in raw material procurement, steel production,

and sales. This will allow Chinese steelmakers to

increase their global competitiveness.

Second, the Chinese steel industry will be

able to enhance its overall technology and prod-

uct quality while exploring neighboring OBOR

markets. China is well aware that the project

cannot survive if based on obsolete facilities

and technologies. Experts also advise that the

Chinese steel industry requires advanced facil-

ities and technologies to reduce local antipathy

in the OBOR nations and advance into these

markets. The “Made in China 2025” and “In-

ternet Plus” initiatives aim to sophisticate and

smarten the steel industry. These initiatives will

become an important foundation for exploring

OBOR markets.

Finally, the Chinese steel industry should

boost its eco-friendliness and further reduce

environmental emissions over the process of

developing OBOR. Since China has already

experienced environmental and energy issues

during the rapid growth of its steel industry, it

can be expected to address environmental and

energy issues from the early stages of the OBOR

project. This is what neighboring countries an-

ticipate from China.

In conclusion, China’s OBOR project can

provide additional opportunities for global

steelmakers if it succeeds in increasing China’s

domestic steel demand and nurturing steel in-

dustries along OBOR. However, if the Chinese

steel industry monopolizes neighboring mar-

kets and competition intensifies among global

steelmakers in these regions, disputes could

certainly arise.

Since China holds the lion’s share of the

global steel market and its implementation of

OBOR is accelerating, the country’s impact on

neighboring countries, such as those in South-

east and Central Asia, is becoming increasingly

prominent. Therefore, the Asian steel commu-

nity needs to establish collaboration channels

among OBOR-related countries, companies, and

international organizations in accordance with

changing trends in Chinese policies. In addition,

necessary settlement measures among the Asian

countries should be emplaced before any conflict

or dispute becomes serious. If so, the Asian steel

industry will be able to pursue balanced and

sound development.

The Asian steel community needs to establish collaboration channels

among OBOR-related countries, companies, and international

organizations in accordance with changing trends in Chinese policies.

Chinese Steel Moves along the One Belt, One Road