Photograph by Teru Onishi for Fortune

Inside China’s Global Spending Spree

“One Belt, One Road,” China’s $3 trillion infrastructure-building campaign, could be a windfall for some Western companies and investors.

The high-rise coastal city of Dubai plays host to all kinds of luxury oddities: indoor ski slopes, gold-bar vending machines, vast artificial archipelagoes shaped like palm trees. But six miles inland, something just as unusual, if far less gaudy, is taking shape—the first coal-fired power plant in the Middle East.

The United Arab Emirates, to which Dubai belongs, need to diversify their energy mix. By 2030, Dubai hopes to balance natural gas and solar and get 7% of its energy from coal. Its first step: a massive “clean coal” project. Workers broke ground in early November for a plant expected to be finished in 2023.

In this petroleum-dominated region, there isn’t much coal-power expertise. But that won’t be a problem for Dubai, thanks to help from unusual sources. The nearly $2 billion project is backed by $1.4 billion in funding from the Chinese government and banks and is being built by Chinese construction crews.

Why such largesse for an emirate swimming in oil wealth? Because Dubai is one of the nations China is targeting as part of One Belt, One Road, an ambitious foreign-investment project designed to boost China’s trade and diplomatic ties with more than 60 countries in the Middle East, Europe, and Africa. China is opening up its checkbook for this group of potential allies: It’s committing $1 trillion through the program in the next ­decade—and as much as $3 trillion over the long term—to huge infrastructure investments, in locations that stretch from China’s coast through the deserts of Xinjiang province and the steppes of Central Asia as far west as Spain and Scandinavia.

Already, nearly $900 billion worth of projects are underway or planned, according to the China Development Bank, and the first ones are almost finished. A $2.1 billion thermal-power plant in Karachi should be completed by the end of next year, just 40 months after construction started.

One Belt, One Road represents China’s biggest overseas spending effort ever, a project that, adjusted for inflation, is at least 12 times the size of the Marshall Plan, the history-changing U.S. program that helped rebuild Western Europe from rubble after World War II. The effort is already seeding power plants, railroads, and pipelines in emerging-market countries starving for such backbone investments. And, notably, it’s sparking optimism among big Western engineering and construction conglomerates that see bigger growth opportunities in these countries than they do in Europe, in the U.S. (even under an infrastructure-friendly Trump administration), or in China itself.

Just as with the Marshall Plan, there’s far more than altruism in play. China’s huge state-owned infrastructure companies, hampered by their own country’s gradual slowdown, need projects that will keep their foundries blazing and their workers paid while the nation makes the transition to a less industrial, more consumer-driven economy. And Belt and Road (as China’s government has rebranded it) helps China earn diplomatic goodwill at a time when the U.S. and Europe appear less willing to invest in economy-building abroad.

But that doesn’t mean Western companies won’t benefit. At the signing ceremony in July that finalized plans for Dubai’s 2,400-megawatt ­Hassyan coal project, the Chinese group set to build the plant and the Saudis who will operate it were joined by a partner: an executive from General Electric ge , standing proudly near a backdrop boasting the familiar blue GE logo. GE staff will be far from bit players here; without their contacts and expertise, projects like the Hassyan plant might struggle to get off the drawing board.

Belt and Road is “a very big deal for GE,” Rachel Duan, president and CEO of GE Greater China, tells Fortune. Her $8 billion division has 23,000 employees whose main business is partnering with Chinese companies across 34 joint ventures in China that manufacture everything from wind turbines to oil pipeline equipment. GE’s biggest customers in China are huge state-owned enterprises, and as those companies go abroad to Dubai and elsewhere, Duan sees GE as just the company to help them; it already has operations in 60 of the 65 countries associated with the Belt project. GE is piggybacking along to the tune of at least $2 billion a year in extra equipment sales—a significant boost even for a company of GE’s scale. “These are hard projects,” Duan says, explaining why Chinese partners are calling on GE. “No single company or single country can pull them off.”

Whether the projects will pay off down the road is an open question: Some critics argue that China is funding them indiscriminately in a global pork-barrel push to build alliances. But in the short run, Belt and Road is creating opportunities for Chinese companies and big multinationals alike—ones that their shareholders can’t ignore.

The New Silk Road

Belt and Road has a historical precedent: the ancient Silk Road that for hundreds of years connected Chinese traders with those in the Middle East and Europe via the Eurasian steppes, Palestine, and Turkey. In an era of wagon caravans and sailing ships, those trading ties did little to extend a then-insular China’s geopolitical clout. But Belt and Road is intended to forge far more binding ties today.

The program, which was formally announced in 2013, is the brainchild of Chinese President Xi Jinping. Xi has already amassed power in military and economic affairs faster than any other modern Chinese leader, says Willy Lam, an expert on Chinese politics and a professor at the Chinese University of Hong Kong. Expanding China’s influence abroad is Xi’s next priority, and Belt and Road is designed to do just that. “It projects Chinese hard and soft power to places as far as East Africa,” says Lam, “and it bonds China with countries … that may otherwise continue to remain dependent on the U.S.”

Joe Ngai, managing partner of McKinsey’s Hong Kong practice, says the need for infrastructure in emerging markets in central and southern Asia and into Africa amounts to $2 trillion to $3 trillion a year. The Belt is the land-based component of Xi’s strategy to meet that demand. It’s a network of railroads, oil pipelines, and other projects that runs northwest from China through Kazakhstan and Russia. The Belt hits multiple Asian countries before turning west through Belarus and Poland into Europe—where it’s bringing investment to countries where post-financial-crisis austerity has crimped infrastructure spending.

The Road (somewhat confusingly) is a maritime route of investments to improve ports along shipping lanes, extending from southern China to Indonesia and west to Africa, the Middle East, and southern Europe. Many of those areas have already attracted intensive Chinese investment in the past decade, and some experts say that “Belt and Road” is merely a slick label added to existing Chinese policy. But the money promised to the new project is anything but superficial.

China Builds a New Silk Road

The famed Silk Road trading routes once connected China with medieval Europe. Today, the One Belt, One Road initiative is strengthening China’s ties to countries along the same routes—and the economic and geopolitical stakes are far higher. According to the Mercator Institute, the 65 countries that could eventually be connected by Belt and Road account for around 30% of the global economy. About $900 billion worth of projects are now either underway or in detailed planning stages, according to the China Development Bank; this map highlights some of the signature projects.

The Decision Makers

Chinese spending abroad for Belt and Road is expected to reach $100 billion annually over the next decade, and China has earmarked as much as $3 trillion for it. The money comes from Chinese-backed development banks, China’s state-owned enterprises, and even local Chinese governments. The funding process is convoluted, but one leading player is the recently formed Asian Infrastructure Investment Bank (AIIB), China’s answer to the World Bank; AIIB is starting with $100 billion to lend. China will be responsible for one-third to one-half of the bank’s financing, but its members include almost 60 other countries.

AIIB’s board is searching for worthwhile endeavors—and so is China’s domestic bureaucracy. “Provinces and cities have been assigned Belt-and-Road quotas [by the central government], and are busy sending delegations abroad to find projects,” Arthur Kroeber of the Hong Kong-based research firm Gavekal Dragonomics wrote recently.

It is essentially up to Xi’s administration to choose the projects. China’s central government decides the countries it wants to work with, and those countries nominate projects for funding. China’s selections reflect both commercial and political interests, analysts say. If the host country is important for political reasons, China may be willing to take losses on construction; if not, China is more likely to invest in collaborations that could eventually offer a positive return. Belt and Road’s political elements were evident in late October when brash Philippine President Rodrigo Duterte, who has disparaged both President Obama and Pope Francis in his bid to push the Philippines away from old alliances, visited China to get in Xi’s good graces. Duterte’s delegation came away with $24 billion worth of funding and pledges for ports, mines, and railways.

The Money Trail

Some Belt and Road projects are already underway. A $23 billion high-speed rail line could someday stretch from China through Thailand to Singapore. In southern Pakistan along the Arabian Sea, two large coal-fired power plants are going up. A gas pipeline running from Russia to China through Siberia is under construction, with a price tag of more than $55 billion. In Europe there’s a massive Czech Republic canal project linking river basins from Poland to Slovakia and Austria that China and the Czechs are each funding with $1 billion investments.

Of the $100 billion a year spent on Belt and Road, about 50% will be used for raw materials like concrete and steel, according to Strategy&, the consulting arm of PwC. For China that’s essentially domestic stimulus: Top Chinese officials have noted that Belt and Road projects can soak up excess steel and iron from Chinese companies hurt by the waning of their nation’s building frenzy.

Another 30% to 40% of total spending will go toward construction, engineering, and high-tech equipment. Those phases will be led by Chinese engineering procurement construction contractors (EPCs), which have a lock on winning the lead business from China’s lenders. China’s goal is eventually to attract private investors in projects that are economically viable. Qatar’s sovereign wealth fund, for instance, took a 49% stake in a Pakistan power plant project, while the Chinese builder Power Construction took the other 51%.

But the EPCs—firms like State Construction International, Metallurgical Corp. of China, and Energy Engineering Corp.—don’t have strong ties in most of the Belt and Road countries. That’s where the West comes in. In effect, the state-owned construction firms will be taking on debt and investing—while hiring Western engineering and construction giants as their subcontractors. “A lot of the time, Western companies have the advantage,” says Joshua Yau, who heads One Belt, One Road initiatives at Strategy&. “A Western company brings in local relationships [and] track records, while the Chinese companies bring in their low cost and their Chinese financing.”

Who Could Win in the West

Who will the EPCs rely on? Early signs favor the companies that already collaborate with them in China, including GE and Honeywell hon from the U.S.; Germany’s Siemens siegy ; Swiss-Swedish multinational ABB; and the Italian-Argentine Techint Group. Most of these companies have headquarters in countries that haven’t joined the AIIB, but their home governments haven’t stopped them from bidding on the building spree. Ultimately, Belt and Road should create a total of $10 billion to $20 billion in additional annual sales for the companies over the next few years, PwC estimates.

Some Western companies are still angling for early projects. For Honeywell, China is now both the biggest international market and the biggest growth driver. In Macau in June, it advertised its services to 20 Chinese engineering firms, saying it would help those suffering from overcapacity by spreading their capital abroad. Honeywell execs say they’re optimistic that they will get contracts from oil and gas deals and from new infrastructure like hotels and hospitals that will rely on Honeywell services.

Other companies appear to have even faster inside tracks. Siemens, the largest engineering company in Europe, has 70 joint ventures in China. And although it hasn’t announced any Belt and Road contracts yet, it’s widely believed to have a lot in the pipeline. And then there’s GE, for which the Dubai Hassyan coal plant is among a dozen projects to which it has committed. In Beijing in October, GE vice chairman John Rice pitched the company’s expertise and global reach to a ballroom full of Chinese construction executives. He said later that Belt and Road should boost GE’s sales by $5 billion annually once the contracts start ramping up in a few years.

Big commodities players, hit hard by falling prices in recent years, are also eagerly awaiting Belt and Road, since so much of the early spending will flow toward raw materials. Executives at mining giants BHP Billiton and Rio Tinto have recently told investors that they hope Belt and Road could revive China’s metal exports, boosting demand for their iron ore. As Sam Walsh, Rio Tinto’s recently retired CEO, said earlier this year, “Of course, all of this will require steel.”

Outreach or Overreach?

Some critics question whether Belt and Road makes as much sense economically as it does politically. “Almost by definition, huge infrastructure projects, especially those in the developing world, are white elephants,” says Lam of the Chinese University of Hong Kong. “It may take at least 30 years to recover the initial investment—not counting huge management costs and costs incurred in providing security.” Lam points to the $50 billion that China has earmarked for investment in a port, railways, and roads in western Pakistan, in particular in the province of Balochistan, which has been plagued recently by separatist terrorism. Already the Chinese military is being deployed to protect engineers from kidnapping, adding untold millions to the project’s cost.

But such obstacles may not ultimately matter to Western conglomerates. The Chinese government is paying for their equipment and know-how on projects that might not otherwise be undertaken. And regardless of whether the investments themselves return a profit, the infrastructure could give these economies a long-term boost, making them more important markets down the road for a global-minded company.

Following the talk by Rice in Beijing this fall, GE hosted a panel whose speakers included Joachim von Amsberg, a World Bank veteran who is now a vice president at the new AIIB, and China’s former vice minister of foreign affairs, He Yafei. On stage, He couldn’t help pointing out that the U.S. and Britain were struggling with isolationist political movements at home. Western laissez-faire economics didn’t have the standing in the world it once did, he said—and the China-backed AIIB was helping fill the void.

Afterward, von Amsberg cheerily called AIIB the “new kid on the block.” Trillions of dollars were needed for infrastructure, he said. Nearly everyone in the room nodded. They would soon be playing with the new kid, and getting a piece.

This is part of Fortune’s 2017 Investor’s Guide, which offers advice about the best strategies for next year. A version of this article appears in the December 15, 2016 issue of Fortune with the headline “China Spreads the Wealth Around.”

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