China's One Belt, One Road project doesn't guarantee market access: Steel exec

Key Points
  • China's massive investment in OBOR doesn't guarantee market access to countries
  • Chinese companies could instead move manufacturing overseas

China's investment in its ambitious One Belt, One Road project will spur infrastructure building, but it does not mean automatic market access along the route, a steel industry executive said Thursday.

"Even if you are an investor…along the One Belt and Road routing, actual investment will not necessarily guarantee you will have access to markets," said Gerry Craggs, managing director for Asia of U.K. steel trader Stemcor.

He cited the example of how U.K. steel manufacturers were able to bring about a dumping case against Chinese steel even though the East Asia giant was a substantial investor into the U.K., which is also a participant in the Chinese initiative.

Launched in 2013, the initiative backed by president Xi Jinping aims to revive the ancient Silk Road and strengthen Chinese ties with more than 60 countries across Asia, Europe and East Africa through infrastructure, trade and investment.

The attraction to China is opening up vast areas of Central Asia that still retain trade links established centuries ago to routes in South Asia, Persia, Arabia and Africa, but now often lack the modern infrastructure needed to attract large-scale investment and trade.

'One Belt, One Road' makes slow progress
'One Belt, One Road' makes slow progress

Craggs said Chinese steel companies could over time reach a saturation point in China and will start to embark on manufacturing activities overseas.

"The way you can succeed is not necessarily through direct trade, but it would be though indirect trade by investing in the manufacturing of steel in countries along those routes," added Craggs, who is also the chairman of the Singapore branch of the International Steel Trade Association.

This will in particular help small-to-medium production units in countries along the route, said Craggs who was speaking at the Singapore Iron Ore Forum on Thursday.

—CNBC's Aza Wee Sile contributed to this article.