One Belt One Road Brings A Significant Boost For China Railway Construction

Analysts expect China Railway Group to receive a bigger proportion of its revenue from overseas operations, as the state-owned construction company starts building projects under the state-led “One Belt, One Road‘ initiative. Continued overseas expansion will help support annual revenue growth of between 3 and 4 per cent in the coming two years, credit rating agency Moody’s said in a note. China Railway is the latest Chinese company to benefit from the ‘One Belt, One Road’ initiative, which involves building major construction and communications projects along the ancient trade routes between Asia and Europe. The company announced last week it had won a US$3.1 billion project to build a rail network in Bangladesh. The line will connect capital Dhaka to southwestern city of Jessore, a distance of 168.6 kilometres. The contract size represents 3.3 per cent of China Railway Group’s latest audited operating revenue, the company said. “This contract award demonstrates the company’s strong capabilities with cutting-edge technologies in railway, bridge and tunnel construction to win large-scale and complex projects,” Chenyi Lu, a Moody’s vice president and senior analyst, said in the note after the deal was announced. As the company enters foreign markets, its overseas revenue will grow to 7 to 8 per cent of total turnover in the next three years from about 5 per cent in 2015, Moody’s said. China has accelerated its rail expansion abroad after it launched the “One Belt, One Road” programme in 2013 to rebuild Silk Road trade links. The projects are carved up by two state-run train makers, China Railway Group and China Railway Construction Corp. Both listed in Hong Kong and Shanghai, the construction giants cover a range of businesses including building and operating rail lines, highways and bridges, as well as developing property and mines. Thanks to a surge in overseas deals, China Railway now ranks first in the top 250 global contractors, while China Railway Construction comes in third, according to industry analyst ENR.