Strengthen cooperation and transform momentum to promote high-quality development of outsourcing engineering industry

In 2020, the new crown epidemic swept the world, increased global political instability, continued economic downturn, and deteriorated business environment.Debt risk is rapidly gathering and financial institutions are becoming more hedged.Energy demand has shrunk, movement of people and goods has been restricted, the international trade index has declined rapidly, and the pace of project promotion and implementation has slowed considerably.

New characteristics of contracted engineering industry in post-epidemic Era

In the short term, the epidemic has brought great impact to the contracted engineering industry. However, in the long run, the way to promote economic development through infrastructure construction remains unchanged globally, China's determination to further strengthen opening to the outside world remains unchanged, the trend of smooth domestic and international circulation remains unchanged, and the goal of high-quality development of the contracted engineering industry remains unchanged.A new round of development will be welcomed in the post-epidemic era for the contracted engineering industry.Generally speaking, the contracted engineering industry will present four characteristics in the post-epidemic era.

I. Short-term epidemic will bring great impact to the contracted engineering industry
The economic downturn in 2020 will result in a sharp decrease in income and a substantial increase in expenditure, which will lead to a decrease in willingness to invest in infrastructure.Continued increase of multi-national debt will reduce the borrowing capacity of each country, resulting in a rapid change from traditional EPC and EPC+F to the mode of integration of construction and construction. In the short term, when integration of construction and construction has not become the mainstream mode and international private capital participation is limited, it will bring a great impact on the global infrastructure market.

2. The demand of global infrastructure market will increase rapidly in the future, and the development potential of China's outsourcing engineering industry is tremendous.
In the post-epidemic era, increasing investment in infrastructure will be the main choice for all countries to boost their economy. Emerging markets and less developed countries will increase investment in traditional infrastructure to accelerate their transformation and development. The World Bank predicts that the global infrastructure investment gap will be about 1 trillion US dollars per year in 2030. The infrastructure gap in developing countries is as high as 200 billion US dollars. At the same time, global infrastructure demand is rising rapidly.Capital gap is also expanding, and capital investment and financing mode needs to be innovated urgently.Developed countries will continue to achieve a second leap in their economy through investment in infrastructure. Global transportation investment demand is expected to reach US$1.7 trillion in 2021, a further US$500 billion increase over the previous year.With the rapid development of new infrastructure construction represented by 5G base station, UHV power transmission and transformation, inter-city high-speed rail and rail transit, new energy charging stake, large data center, etc., China's outsourcing engineering industry will face a new round of development opportunities driven by the superposition of traditional and new capital construction.

3. Adjustment of global energy structure and explosive growth of green and renewable energy sources
The outbreak of the new crown epidemic has attracted renewed global attention to climate change, making the transformation of energy structure to cleaner a common choice for all countries. Up to now, more than 30 economies have launched green recovery plans with supporting economic policies.

On December 12, 2020, Chairman Xi Jinping pointed out at the United Nations Climate Ambition Summit that China will actively implement the carbon peak in 2030 and the carbon neutralization plan in 2060. In 2030, the total installed capacity of wind and solar power in China will reach over 1.2 billion kilowatts. British Prime Minister Johnson said that he will terminate his direct support for overseas petrochemical fuel projects.There are 131 institutions worldwide that do not support coal-fired power, and Pakistan announced on 23 December 2020 that it would cease its support for coal-fired power.The International Energy Agency predicts that by 2050, the proportion of global renewable energy generation will exceed 80%, of which photovoltaic and wind power installations will be five times as high as 2019, and total investment in renewable energy is expected to reach 49 trillion yuan by 2020-2030, with an annual investment of about 4.5 trillion yuan, which is equivalent to five times of 2019. Driven by the promotion of green and low-carbon development and technological innovation around the world,Green energy projects will be a new engine for the outsourcing industry.

IV. The project sustainability will be paid more attention to in the project contracting industry in the post-epidemic Era
Under the background of global risk surge, government departments, financial institutions and industrial enterprises pay more attention to the sustainability of projects. The integration of construction and marketing operation will become two main characteristics of sustainable development of outsourcing engineering industry.On the one hand, the global "EPC+F" mode has entered the stock market stage. Compared with the pure equity income investment project or the general contracting project, the integrated project involves more stages, covering the whole life cycle of the project, and needs more powerful resource integration capability.On the other hand, project sustainability requires rigorous assessment of economic benefits, environmental impacts, social benefits and degree of resistance to natural risks of the whole life cycle of the project. Only economically feasible, environmentally friendly, socially significant and risk-resistant projects can receive more support and whether the project is sustainable or not.It will become an important indicator to promote project focus in the external contracting engineering industry.

Suggestions on high-quality development of outsourcing engineering industry in post-epidemic Era

General Secretary Xi Jinping pointed out that we are now in a great change that has not occurred in 100 years.In the rapidly changing post-epidemic era, four suggestions are put forward from the perspective of enterprises on how to guide enterprises in the external contracting engineering industry to develop new opportunities in the crisis and start a new stage in the changing situation.

1. Strengthen cooperation and fight epidemics, promote common support among the people and jointly respond to the global economic downturn
In the face of the second or even third wave of epidemics that may rage again globally, governments should further expand their openness, intensify intergovernmental collaboration in fighting epidemics, strengthen macro-policy support and create a good business environment.Financial institutions should further enrich financial products and increase financing support for key projects.Industry enterprises should increase project construction to promote local employment, improve the quality of local employees and promote the economic development of the host country.

In recent years, our company has invested and constructed more than 11 billion US dollars in Pakistan. Based on the project group, China Association of Foreign Contractors (hereinafter referred to as the "Contractors Association"), China Nengjian Gezhouba Group International Engineering Co., Ltd. (hereinafter referred to as the "Gezhouba") and the Pakistani Skills School jointly initiated the establishment of China Nengjian Gezhouba Pakistani Ruban College.Systematic training for Pakistani personnel has played a good role in fighting the epidemic, stabilizing employment and promoting local economic development.

2. Innovating the Development Model of Outward Contracting Engineering Industry
First of all, we should promote the diversification of equity structure, actively introduce international financial capital to participate in the construction of international infrastructure projects, construct the system and mechanism of risk-sharing and benefit-sharing, maximize the advantages of all parties, and enhance the risk-resistant ability and investment returns of the projects.

Secondly, we should insist on diversification of financing modes, actively discuss various modes such as project financing, corporate credit, bond issuance, etc., and reduce financing costs by means of policy financial institutions, international syndicate, etc., so as to improve project yield.Finally, we will adhere to the diversity of cooperation methods and strengthen cooperation in investment and financing, technology, consulting, supply and total subcontracting.

The Vietnam Electric Power Project invested and built by Gezhouba with a total installed capacity of 1200MW and a contract value of 1.65 billion US dollars is jointly invested by Gezhouba United Saudi Top Energy Investment Enterprise, first-class Korean Enterprise and CIC. The project is developed through an integrated construction model to ensure the sustainability of the project and diversification at the equity level.To maximize the advantages of all parties in the value chain while creating a large number of jobs for the host country and improving its industrialization level is a model project for our company to practice third-party market cooperation.

3. Actively Practice the Concept of Green Sustainable Development
First, we will build a high-quality development system featuring sustainability, livelihood promotion, strong economy and environmental protection, focus on areas with good foundations, strong representation and strong radiation belt power, share China's green development concepts, modes, technologies and achievements with the host country, build a green demonstration project and help the host country embark on the path of green sustainable development.

Secondly, under the guidance of the Reform Commission, the Energy Bureau and the Ministry of Commerce, Gezhouba launched the International Investment Alliance for New Energy in conjunction with China Credit and Insurance, Industrial and Commercial Bank, China-Africa Funds and top enterprises in the industry. The alliance will give full play to its advantages in design, product, construction and operation, increase investment and financing for green projects, and focus on hydropower, wind power, photovoltaic, biomass and energy development.Clean energy projects such as tides and geothermal.

Finally, we must adhere to the concept of planning-first development, consider the overall benefit of the project as a whole, and realize the sustainable development of the whole life cycle.The recent signing of the Saudi Red Sea Tourism City Project by Gezhouba will be the first fully renewable energy-efficient tourism complex in the region to achieve its carbon neutralization goals.

4. Further develop the active role of trade associations
CONTRACTOR COMPANY is establishing a platform to promote exchange between government, bank and enterprise. In 2020, CONTRACTOR COMPANY organized many effective seminars for industry enterprises through online and offline forms, which provided timely guidance and support for industry enterprises to cooperate in anti-epidemic.

Firstly, strengthen the training. It is suggested to further promote the exchange among member enterprises by convening various forums, seminars and exchanges.At the same time, it is suggested to refine and summarize the effective methods to cope with common problems for industrial enterprises, strengthen the training of member enterprises and promote the healthy development of high quality industry.

Secondly, give full play to the channel advantages of CONTRACTOR'S COMMUNICATION and play a good role as a link and bridge between government and enterprise.Finally, we will further strengthen supervision and coordination, strictly follow the requirements of the negative list, and increase punishment to create an industry atmosphere of self-discipline and orderly competition.

No winter is insurmountable, no spring is not coming, the road is blocked and long, the road will come, and the future can be expected!China Nengjian Gezhouba Group is willing to work hand in hand with you to cope with the adverse effects of the post-epidemic era under the guidance and support of the CONTRACTOR's Association, so as to accelerate the transformation and upgrading of industrial enterprises and achieve high-quality sustainable development.