Home » Chinese Government Throws Weight Behind International Projects
As the excitement over the World Cup ebbed in mid July, Latin American politicians got busy dealing with China’s President Xi Jinping, who dashed through Brazil, Argentina, Peru and Venezuela signing 150 projects worth a colossal $70 billion. The deals included construction of a metro rail in Brazil and several projects worth $7 billion in Argentina.
"We know that cooperation with China has not brought us debt, but greater development," Venezuelan President Nicolas Maduro said after shaking hands with the Chinese President over a bouquet of deals including a $700-million gold exploration project and others worth $4 billion in cash.
Xi’s Latin American success, which seemed to suggest that China was extending its African romance to other parts of the globe, came on top of a nasty surprise from Uganda, which invited only a Chinese contractor for an $8-billion rail project in May without giving U.S. companies an opportunity to bid.
These successes might seem surreal to western contractors, who regard Chinese construction services providers (CSPs) as backward entities lacking sophisticated project management and technological capabilities. What is more, the Chinese government consciously keeps them isolated from western companies with the use of legal barriers against collaboration.
Under China's regulations covering offshore construction projects requiring foreign investment, fully owned foreign companies are restricted to building only a few projects that are financed by international institutions, which have at least 50% foreign investments and projects that are “so technically demanding that Chinese CSPs will not able to undertake by themselves.”
Lobbying for a larger role, the European Chamber of Commerce in China, said in a position paper, “Many Chinese CSPs are in huge need for professional teams which possess international qualifications and are familiar with the best practices of international construction market. The lack of such international qualifications and expertise has, to some extent, acted as a barrier to prevent Chinese CSPs from competing for top-level international projects”.
It said collaboration with European firms will “facilitate Chinese CSPs to gain greater exposure to best international practices and improve their efficiency and competency in the international market.”
But it seems China’s state-owned construction companies are doing quite well without these advantages. Chinese firms like China Railway Construction Corp. have other qualities that U.S. or European companies cannot match.
“An important reason for the successes of Chinese companies is the fact that they often offer lower costs with the same good quality,” He Weiwen, a professor of economics at Beijing’s Renmin University, told ENR.
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