Opportunities Arising from Infrastructure-Related Exports to BRI Countries

The equipment manufacturing sectors play a crucial role in industry. As the growth of China’s economy enters a new stage, it is important for Chinese equipment manufacturing companies to increase their presence in overseas markets. Currently, some sectors in equipment manufacturing are making technological breakthroughs and enjoying cost advantages, but moves to increase Chinese companies’ presence in BRI countries have encountered obstacles. High-speed railway, nuclear power, and other sectors in China that were thought to be very likely to expand overseas have not been as successful as expected over the past decade. Understanding the reasons behind their uneven progress in overseas expansion can help improve the direction of policies for the future expansion of China’s equipment manufacturing sectors in BRI markets. An overview of the equipment manufacturing sector in China reveals that the export of infrastructure construction equipment to BRI countries is playing an important role in the sector’s global expansion. Equipment manufacturing sectors in China enjoy high output value and balanced positions on the supply and demand sides of the global market, but the exports of leading companies remain low. Chinese companies have built a more significant presence in developing countries than in developed countries, and the export of infrastructure construction equipment is proceeding more rapidly compared to that of manufacturing equipment. The presence of domestic sectors overseas is highly correlated to their domestic production rates. However, we note that overseas market shares remain low for several sectors that have recorded high domestic production rates. An analysis of major sectors reveals that project-based industries encounter many challenges. We note that overseas market shares of China’s product-based industries exceed those of its project-based industries, and overseas market shares of market-driven industries exceed those of government-driven industries. We believe that it will take time for Chinese companies to gain market share in developed countries due to limitations in their brands and distribution channels. Among China’s project-based industries encountering challenges in developing countries are high-speed railways and nuclear power. First, project-based industries require substantial funding and may come under pressure on the demand side in BRI countries. Second, these industries are likely to be affected by geopolitical issues. Third, China does not have advantages in project management and financing. As a result, Chinese companies may encounter challenges in expanding their overseas presence, even if they have technologies that meet overseas standards and their product costs are low.