Labourers work on a construction site in Beijing. China plans a $16.3bn fund to finance construction of infrastructure linking its markets to three continents as President Xi Jinping pushes forward with his plans to revive the centuries-old Silk Road trading route.
China plans a $16.3bn fund to finance construction of infrastructure linking its markets to three continents as President Xi Jinping pushes forward with his plans to revive the centuries-old Silk Road trading route.
The fund, overseen by Chinese policy banks, will be used to build and expand railways, roads and pipelines in Chinese provinces that are part of the strategy to facilitate trade over land and shipping routes, according to government officials who participated in drafting the plan.
More policies will be rolled out soon to encourage Chinese lenders to finance infrastructure in countries along the route connecting China to Europe, said the officials. They asked not to be identified as they weren’t authorised to speak publicly about the plans. Chinese companies will also be urged to invest in the countries and bid for contracts, the officials said.
The new Silk Road plan, comprising a land-based belt and a maritime route, has been referred to as a Chinese national strategy after Xi first proposed the idea in Kazakhstan a year ago. It envisions an economic cooperation bloc through to the Mediterranean that revives the old Silk Road, where trade helped developed civilisations along the route.
“Previously, China focused on attracting foreign investment, but now the shift is being made – China’s more and more encouraging its capital to go abroad,” said Feng Yujun, senior researcher at the China Institutes of Contemporary International Relations in Beijing.
Xi’s overseas push comes as he tries to shape China as a great power, restoring its maritime dominance in the Asia-Pacific and extending its political and economic influence across the region, where it has been asserting itself in territorial spats. Next week, Xi will reinforce the image as he hosts US President Barack Obama and other world leaders at the Asia Pacific Economic Co-operation summit in Beijing.
The State Council Information Office didn’t immediately respond to faxed questions seeking comment.
The fund will finance domestic infrastructure construction and will be overseen by Chinese policy banks such as China Development Bank, the officials said. Financing will be limited to regions in the plan: Central Asia, the Middle East, South Asia, Southeast Asia and parts of Europe, they said.
The plan signals “a shift in China’s strategic thought,” said Zhang Yunling, director of the Institute of Asia-Pacific Studies at the Chinese Academy of Social Sciences. The past three decades of China’s development have been focused on “absorbing foreign investment” and the next step will be about the outflow of Chinese development to its neighbours, he said.
Xi raised the “new Silk Road Economic Belt” idea at his speech in the Kazakhstan capital Astana on September 7, 2013. One month later, when addressing the Indonesian parliament in Jakarta, he pitched “the 21st Century Maritime Silk Road.”
The proposal has inspired competition between officials from Chinese provinces, especially the poorer western regions, seeking to tap the funding. Vice premier Wang Yang said in September in Urumqi, the capital of the western Xinjiang region, that it had a “prominent role to play” in the economic belt and the central government “supports Xinjiang to seize the historical opportunity” to become the hub of the belt.
The southern province of Guangdong, a manufacturing center that helped power China’s economic rise over the past three decades, in early November hosted the inaugural international expo for the maritime Silk Road, with 42 countries participating.
“One of the most important considerations in the strategy is its attempt to reduce the imbalance between the eastern coastal areas and the western inland areas,” Feng said.
Xi, who has said his home province Shaanxi was the starting point for the old Silk Road, has recently ramped up efforts to sell his strategy overseas. During state visits in September he secured verbal commitments from three countries along the routes – Tajikistan, the Maldives and Sri Lanka. India has also shown interest and Afghanistan’s new president Ashraf Ghani Ahmadzai said at his summit with Xi in last week that his country was keen to be involved, according to the official Xinhua News Agency.
According to a map published on the website of the official Xinhua News Agency in May, the land-based Silk Road starts from the ancient capital city of Xi’an, stretching west through Lanzhou and Urumqi before running southwest across Central Asia, the Middle East and Europe.
The sea-based Maritime Silk Road goes through Guangdong and the southernmost Chinese province of Hainan, an island, en route to the Malacca Strait and Indian Ocean. It traverses the Horn of Africa before entering the Red Sea and Mediterranean. The two roads are supposed to meet in Venice.
Once complete, the Silk Roads will bring “new opportunities and a new future to China and every country along the road that it is seeking to develop,” according to the Xinhua article.
LEAVE A COMMENT Your email address will not be published. Required fields are marked*
Snap’s record rout leads $142bn selloff
ECB seen boosting QE flexibility to smooth exit from crisis tool
Lebanon eyes IMF progress despite new turmoil, says economy minister
Top oil exporter Saudi Arabia targets net zero emissions by 2060
Smash-hit bitcoin ETF ups the ante for issuers racing to launch
Fed chief flags rising inflation risk, remains patient on rate hikes
FIFA World Cup Qatar 2022 seen having impacts across three timeframes: Forex expert
Trans-Pacific Partnership supports continued global trade growth: QNB
Qatar-Indonesia trade reaches QR2.5bn in 2020