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 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.
Full article: China plans $16.3bn fund to construct new Silk Road (Gulf Times)