Researchers from Yuanlifang Financial Services believe that the overall level of infrastructure construction in countries and regions along the "Belt and Road" is lagging behind, and the construction demand is huge. Infrastructure construction will be the most basic and urgent need along the "Belt and Road" route, and it is also necessary to alleviate the overcapacity of my country's infrastructure industry. PPP is the basic method of infrastructure construction. The PPP model is chosen as the investment and financing arrangement for infrastructure construction. Yuanlifang Financial Services researchers believe that this is mainly because the characteristics of infrastructure construction and the PPP model can achieve better cooperation. At present, the PPP model has gradually emerged in the infrastructure construction along the "Belt and Road", such as the East Africa-Asia-Djibouti Railway Project using EPC OM form, and the Pakistan Kasim Port coal-fired power station project using BOO model. With the increasing support from the state, the PPP model will play an increasingly important role in the construction of infrastructure along the "Belt and Road".

1. "Belt and Road" strategy, infrastructure construction is the first priority

The overall level of infrastructure construction in countries and regions along the "Belt and Road" is lagging behind, and infrastructure construction will be the most basic and urgent need along the "Belt and Road". Infrastructure is the common material basis for residents and enterprises to carry out production, operation and life, and is the guarantee for the normal operation of urban main facilities. According to the Global Competitiveness Report 2016-2017 released by the World Economic Forum, the infrastructure level stratification phenomenon is obvious in the major countries and regions along the "Belt and Road". At the same time, among all 138 sample countries, there are a large number of countries and regions along the "Belt and Road". Yuancun Financial Services researchers found that the infrastructure level is mainly low- and middle-income countries, which ranks low-level infrastructure level, indicating that their infrastructure construction development is lagging behind. Infrastructure construction has the so-called "multiplier effect", which can bring about a total social demand and national income that is several times the investment amount. If countries along the "Belt and Road" have to achieve long-term, sustainable and stable economic development, infrastructure construction will be an important material foundation.

The demand for infrastructure construction of the "Belt and Road" is huge. The "Belt and Road" is proposed under the new situation. It connects Asia, Africa and Europe. It has a new regional cooperation framework that covers a large range of areas and involves a wide range of investments. Since most of them are transnational projects, the project structure is complex and the participating entities are numerous. At the same time, given the different levels of infrastructure construction in countries along the "Belt and Road", infrastructure construction in low- and middle-income countries is still seriously lagging behind. Yuancun Financial Services Research believes that their demand for infrastructure construction will be extremely huge.

l Assuming that the overall infrastructure investment accounts for about 5% of GDP, according to the World Bank's data, the GDP of countries along the Belt and Road (including China) in 2015 was about US$24.86 trillion, accounting for about one-third of the global economic total, so the demand for infrastructure along the Belt and Road may reach US$1.24 trillion per year;

l According to the Asian Development Bank's forecast, for the Asian region alone, US$26 trillion will be needed to invest in infrastructure by 2030 to resist poverty, promote economic growth and respond to climate change, and more than US$1.7 trillion will be required every year, which is twice the current US$881 billion investment.

Yuanlifang Financial Services Research believes that infrastructure construction is not only an urgent development for countries along the "Belt and Road", but also necessary to alleviate the overcapacity of my country's infrastructure industry. On the one hand, due to financial tensions, some countries along the "Belt and Road" have insufficient investment expenditures, and generally the demand for infrastructure construction is extremely strong. On the other hand, my country's domestic excess capacity can cooperate with the "BRICS Development Bank" and the Asian Infrastructure Investment Bank" to build and realize the strategic concept of conducting infrastructure investment business to the outside world under the background of the "Belt and Road" strategy. China's foreign contracts completed in 2015 were RMB 1 trillion (equivalent to approximately US$154.07 billion), accounting for only 12.4% of the infrastructure demand along the "Belt and Road". With policy support, foreign engineering contracting enterprises can "go global" to form a large export pull, effectively hedging the decline in domestic demand and thus leading the entire "infrastructure industry chain". Subjective willingness and objective conditions form a synergy. In the future, my country's infrastructure enterprises' pace of "going out" will accelerate significantly, and the broad industrial expansion prospects of overseas markets will gradually open up.

2. PPP is the basic way of infrastructure construction

Infrastructure construction requires huge financial support. According to our previous investigation of the sources of funds for the "Belt and Road" in the "Belt and Road", the four official financing channels, Silk Road Fund, Asian Infrastructure Investment Bank, BRICS Development Bank and SCO Development Bank, can provide financing scale for the construction of the "Belt and Road" at about US$350 billion, but compared with the larger infrastructure demand, it is still difficult to invest in the field of infrastructure, in addition to funds, the organization and application form of investment is also crucial. Judging from global experience, PPP is an optimal form of project arrangement for Yuancube Financial Services research tasks.

Why choose a kind of investment and financing arrangement like PPP? When choosing the PPP model as the investment and financing arrangement for infrastructure construction, Yuanlifang Financial Services Research believes that it is mainly because the characteristics of infrastructure construction and the PPP model can achieve better cooperation:

From the perspective of the characteristics of infrastructure construction, there are three main reasons: 1. The amount of funds required for infrastructure construction is extremely large, and because the investment and construction operation cycle is relatively long, it is undertaken by the government or a company separately, and the pressure on capital turnover will be very huge; 2. The infrastructure has high asset-specificity, and the two parties to the transaction have a high degree of mutual demand and dependence. Compared with the external market contract form, it is more inclined to adopt the form of internal organizational integration; 3. Infrastructure construction and operation are naturally monopolistic to a large extent, and in an infrastructure field, it can only be operated by one enterprise. These characteristics determine the particularity of infrastructure construction arrangements and also determine the necessity of using PPP for infrastructure construction;

lOn the other hand, from the characteristics of the PPP model, there are countless forms and possibilities for PPP between 100% state-owned to 100% private ownership. The PPP model can separate the various links of construction, investment and operation. Any enterprise can freely participate in a certain part of the PPP project construction process instead of taking all the work and risks. Its flexibility can bring the strengths of each enterprise participating in the construction to a higher extent;

Yuanlifang Financial Services Research believes that the PPP model will play an increasingly important role in the construction of infrastructure along the "Belt and Road". On December 12, 2016, the Investment Department of the National Development and Reform Commission and the United Nations Economic Commission for Europe held a negotiation meeting on the "Belt and Road" PPP working mechanism in Beijing. Both sides agreed that promoting the PPP model in the construction of the "Belt and Road" can better provide public products and public services and help countries along the route achieve sustainable development goals. In January 2017, the Development and Reform Commission, together with 13 departments and units including the Ministry of Foreign Affairs, the Ministry of Environmental Protection, the Ministry of Transport, the Ministry of Water Resources, the Ministry of Agriculture, the People's Bank of China, the State-owned Assets Supervision and Administration Commission, the Forestry Bureau, the China Banking Regulatory Commission, the Energy Bureau, the State-owned Foreign Exchange Bureau, the All-China Federation of Industry and Commerce, and the China Railway Corporation, jointly established the "Belt and Road" PPP working mechanism, strengthened cooperation with countries along the route in infrastructure and other fields, actively promoted the PPP model, encouraged and helped Chinese enterprises to "go global", and promoted the implementation of relevant infrastructure projects as soon as possible.

3. Opportunities in key areas of cooperation in infrastructure construction

Infrastructure mainly includes: 1) transportation fields such as railways, highways, aviation, and water transportation; 2) environmentally friendly water conservancy fields such as reservoirs, dams and urban water supply and drainage, sewage treatment, and air purification; 3) energy and power fields such as oil, coal, natural gas, and electricity; 4) residential buildings such as residential areas, villas, and apartments; 5) office commercial buildings such as high-end hotels, shopping malls, office buildings, and office buildings; and 6) post and telecommunications, communications, and information networks, etc., which provide common conditions and public services for direct production departments and people's lives.

1 Transportation infrastructure field

Yuanlifang Financial Services Research believes that the current market demand for transportation infrastructure construction is in a period of continuous expansion. According to PwC, by 2020, the global market size of the transportation infrastructure sector will reach 3.2 trillion pounds, of which the infrastructure market in the Asia-Pacific region alone will achieve an average annual growth of 7% to 8% in the next 10 years, and will be close to the level of US$5.3 trillion in 2025. Most of the countries in Asia, Africa and Latin America along the "Belt and Road" are emerging economies and developing countries. They are in the rising period of economic development and are still in the infancy stage in the construction of transportation infrastructure. With the continuous advancement of their own economic and social development and modernization, there is a strong desire to improve the backward status of transportation infrastructure such as roads, high-speed rail, ports, ports, airports, etc.

The "Belt and Road" transportation infrastructure interconnection has achieved initial results. At present, Yuanlifang Financial Services Research believes that the transportation infrastructure of countries along the "Belt and Road" has initially met the basic conditions for interconnection. Among the countries along the route, 9 countries have achieved railway connectivity with China, 28 countries have direct flight cities with China, and 58 countries have achieved sea connectivity with China. Among them, there are 4 countries that have direct flight cities, railways and sea routes connected to China, accounting for 6.35%; there are 21 countries that have direct flight cities and sea routes connected to China, accounting for 33.33%; there are 1 countries that have direct flight cities and railways connected to China, accounting for 1.59%; there are 4 countries that have direct flight cities and railways connected to China, accounting for 6.35%; there are 2 countries that have direct flight cities and sea routes connected to China, accounting for 3.18%; there are 29 countries that have direct flight cities connected to China, accounting for 46.03%; there are 2 countries that have neither direct flight cities nor sea routes connected to China.

The construction of the "Belt and Road" will promote the Chinese standards for transportation infrastructure construction to the world and realize the "redefinition" of international standards. The field of transportation infrastructure mainly includes the construction of infrastructure such as national high-speed railways, urban rail transit, expressways, airports, ports, postal and express delivery. With the "Belt and Road" strategy, domestic transportation infrastructure construction companies will promote China to "go global" from technical standards, equipment manufacturing, survey and design, engineering construction and operation management through contracting projects, direct investment and other means.

1) Current status of transportation infrastructure investment

¤ Direction of China-Mongolia-Russia Economic Corridor: Signed a framework agreement on port cooperation with Russia and Mongolia, and completed the opening of the Uliji Port on the China-Mongolia border;

¤ Direction of the New Asia-Europe Continental Bridge Economic Corridor: Issuing the "China-Europe Express Brand Construction Plan", focusing on building a unified logistics brand for China-Europe Express.

¤ Direction of China-Central Asia-West Asia Economic Corridor: The "Angelian-Pap" railway tunnel project of the China-Jiji-Ukraine Railway (in Ukraine) was completed and opened to traffic, and the No. 1 tunnel of the "Wakhdat-A Bay" bridge and tunnel project in Tajikistan was completed;

¤ Direction of China-Indochina Peninsula Economic Corridor: The construction of the Jakarta-Bandung High-speed Railway has started, and the construction of the China-Laos Railway is progressing smoothly. The Yuxi-Mohan Railway project in the country is being constructed at a faster pace;

¤ Direction of China-Pakistan Economic Corridor: Construction of the second phase of Karakoram Highway in Pakistan and the Karachi Expressway started, and a number of key projects such as the Orange Line of Lahore Rail Transit have been completed. The nuclear power projects in Chahima and Karachi in Pakistan are progressing smoothly;

¤ Direction of Bangladesh-China-India-Myanmar Economic Corridor: The China report of the four countries has been completed. The Chinese consortium of the Myanmar Kyaukpyu Special Economic Zone project has won the bid;

¤ Direction of the 21st Century Maritime Silk Road: Sri Lanka's Port City resumes work, the second phase of Hambantota Port is about to be completed, and the equity acquisition project of Piraeus Port in Greece is fully delivered.

2) Classic case--East Africa-Asia-Djibouti Railway Project

The Asia-Djibouti Railway is the first electrified railway in East Africa. It is another transnational railway built by China in Africa after the Tanzania-Zambia Railway. It has now become a backbone railway with freight as the main line and passenger and freight trains running in collinear direction, spanning Ethiopia and Djibouti. The Asia-Djibouti Railway starts from Asa Ababa, the capital of Ethiopia in the west, passes through important cities Adamama and Dredava, and reaches the Djibouti Port in the east. It is about 752 kilometers long and is built using China's second-level electrified railway standards. The designed passenger speed is 120 kilometers per hour and the freight speed is 80 kilometers per hour. There are 45 stations distributed in total. The initial transportation capacity is 6 million tons/year. In the long term, the transportation volume can be increased to 13 million tons/year through double-track transformation. The total investment of the project is about US$4 billion (including rolling stock and rolling stock procurement).

The Asia-Djibouti Railway Project is operated in the EPC OM mode. The entire eastern section of the railway is constructed by China Civil Engineering Group Co., Ltd., which belongs to China Railway Construction Corporation, and the western section is constructed by China Railway Second Bureau Co., Ltd., which belongs to China Railway. 70% of the funds of the Ethiopian section and 85% of the funds of the Djibouti section are loaned from China Export-Import Bank. Ethiopian and Djibouti respectively insure credit guarantee insurance for loans to China's export credit insurance companies.

The project signed an agreement at the end of 2011 and was fully opened in June 2015. In August 2015, Ethiopian Railway Company and Djibouti Railway Company formed a joint venture to bid for the railway operation and management rights. On July 28, 2016, China Turkey Group signed the "Aditas Ababa-Djibouti Railway Operation Management Service Contract" with Ethiopian Railway Company and Djibouti Railway Company, providing services and technical support for the operation and management of the Asia-Djibouti Railway in the next six years, and shifting from the "turnkey project" of general contracting to the "construction and operation integration" model, officially realizing the role of a simple construction party to an investor and an operation service provider. In October 2016, the Asia-Djibouti Railway was opened to traffic.

The Asia-Djibouti Railway is the first overseas railway project integrating design standards, investment and financing, equipment materials, construction, supervision and operation management to "sinize" the entire industrial chain. It marks a major breakthrough in the "going out" of a complete set of China's railways and is a landmark achievement of the "Belt and Road".

2 Power Engineering Construction Field

Yuanlifang Financial Services Research believes that after years of development, my country's power companies have outstanding technical advantages in the fields of nuclear power, wind power, photovoltaic power generation, smart grids, etc., forming advantages in the entire industrial chain projects such as planning and design, construction, investment and operation, equipment manufacturing, consulting services, operation and maintenance management, and accumulated rich experience in foreign investment.

1) Current investment status of power engineering infrastructure

Up to now, my country's main investment projects in countries along the route include Pakistan's "Mertyari-Lahore Power Transmission and Transmission Project", Kalot Hydropower Station, Qasim Port Thermal Power Project, Laos' "Segong Power Transmission and Transmission Project", "Nantahe No. 1 Hydropower Station", Ethiopia's "kilovolt power transmission and transformation project", "Goba Hydropower Station", Zambia's "MC70 transmission line project", "Xiakaifuxia Hydropower Station", etc. In addition, Indonesia, Myanmar, Kyrgyzstan, Mongolia, Russia, Nepal and other countries have launched power cooperation projects with my country. While my country's power investment projects have increased across countries along the route, it has also driven the export of related power equipment. For example, in 2015, China and Laos received a successful cooperation "Belt and Road" power grid project, which was put into production, which has promoted China's US$310 million in power equipment exports, and at the same time accelerated the "going out" of key technologies such as my country's ultra-high voltage transmission technology, thermal power generator sets, hydropower unit technology, and nuclear power technology.

2) Classic case-PPP project of the Coal-fired Power Station in Port Kasim, Pakistan

In recent years, Pakistan's power gap has been increasing, with the largest annual power gap of about 4,500, resulting in a 12-16-hour power outage in many areas across the country. Among the national thermal power generation of Pakistan, gas and fuel power generation account for more than 90%, coal-fired power generation accounts for less than 1%, and low-cost coal-fired power is insufficient. In order to change the current situation of power tension, the Pakistani government has taken a series of measures to increase investment in the power industry and encourage and attract foreign and private capital to invest in the power field.

As early as 2013, China and Pakistan proposed the concept of the Qasim Port Project and included it in the "China-Pakistan Economic Corridor Early Harvest List", becoming one of the priority implementation projects of the "China-Pakistan Economic Corridor". On April 20, 2014, the Qasim Port Project successfully completed the "Implementation Agreement" and the "Power Purchase Agreement" and completed the "Land Leasing and Port Service Agreement" on the 23rd; on May 21, 2015, the project pile foundation project groundbreaking ceremony was held, and within just 14 days after the signing of the EPC contract, the project officially entered the construction stage immediately. On December 23, 2015, the Chairman of the Pakistan Private Power Infrastructure Committee (PPIB) and the President of the Kasim Port Electric Power Company signed a financing closure document in Islamabad, marking the official completion of the financing closure of the Qasim coal-fired power plant project. On March 16, 2016, Kasim Port Electric Power Company (which is controlled by China Power Construction Group Overseas Investment Co., Ltd.) awarded the Kasim Port coal unloading terminal project in the form of EPC to China Hydropower Construction Group Port Shipping Construction Co., Ltd. (hydropower Port Shipping). The project is a supporting facility for coal-fired power stations, with the main body including the construction of coal-free ports and waterways, with an amount of approximately US$240 million.

The total investment of the Qasim Port coal-fired power station is about US$2.085 billion, and it is invested and developed in the BOO model. It is the first large-scale energy project invested by Sino-foreign cooperation (China Power Construction Group and Qatar Al-Company). It includes power station projects, coal-unloading terminals and waterway projects for power stations. The power station is designed and installed with 2 660MW supercritical units, with a total installed capacity of 1.32 million kilowatts, an average annual power generation of about 9 billion kW, and the construction period is 36 months, which is 12 months shorter than the feasibility study stage. The two units will be put into production and power generation on December 30, 2017 and March 31, 2018 respectively, and the project will enter commercial operation by the end of June 2018. Pakistan's State Electricity Regulatory Authority has approved the electricity price of the project to be 8.12 cents, valid for 30 years.