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10 Key Facts about the 1 trillion Belt and Road Initiative

Updated 7 Oct 2018

Written by TY Chin
Copyright © 2017 WiseNet Asia Pte Ltd.  All Rights Reserved

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1. Objectives

For Belt and Road Initiative (BRI) or One Belt One Road (OBOR) Countries:  China led shared economic growth through joint infrastructure developments and trade connectivity.

For China:  New markets for China products; exporting of China’s engineering and technology expertise, drive growth in the hinterlands.

2. Coordinating Government Agency

National Development and Reform Commission (NDRC), China’s premier economic planning agency.

3. The Routes

Silk Road Economic Belt consist of three land routes from China’s western region through Central Asia, extending up to North of Europe.

21st Century Maritime Silk Road consists of two shipping routes from Western Asia, through South East Asia, Africa and Europe.

4. Coverage

3 continents – Asia, Europe and Africa, 68 countries, 1/3 of the world’s GDP and 62% of the global population.

5. Common Traits of Belt and Road Countries

  • Belt and Road countries in Asia are mostly emerging economies with infrastructure deficits, except Singapore.
  • Suppliers of natural resources.

6. Major Beneficiaries

Banks in ASEAN, large scale infrastructure and townships developers, construction companies, construction engineering machineries, building materials, marine projects, water and power installations.

7. Financiers

  • China Policy banks: China Development Bank (CDB) and the Export-Import Bank of China (EXIM).  Both have extended $200 billion loans in Belt and Road projects as at 2017.
  • Multilateral development banks: Asian Infrastructure Investment Bank (AIIB), Asian Development Bank (ADB), New Development Bank (NDB). AIIB was set up specifically for funding infrastructure projects, it has a registered capital of $100 billion with 56 members countries.  ADB’s key mission is to eliminate poverty.  Southeast Asia and South Asia are major destinations for ADB’s lending.
  • Funds: Silk Road Fund. Renminbi Overseas Funds and China-Russia Development Fund.  The Silk Road Fund was launched in 2015 with $40 billion of initial capital.

8. Flagship project

The China-Pakistan Economic Corridor (CPEC) is a massive infrastructure development program in Pakistan.  Started in 2013, the CPEC is budgeted to cost USD62 billion.  The project is estimated to create 2.3 million jobs between 2015–2030, and add 2 to 2.5 percentage points to the country’s annual economic growth.

9. China Outward Direct Investment in ASEAN

(in million US$)

Year\Country Thailand Malaysia Singapore Indonesia
2016 1071.91 1407.77 6037.70 354.77
2017 255.15 1600.46 4483.80 1840.82

10. Future of Trade in ASEAN

  • Internationalisation of RMB as OBOR countries increasingly used RMB for transactions.
  • Reduce trade barriers.
  • Shifting the global economic centre of gravity.

Disclaimer:  The opinions in this article are those of the authors and do not represent Wisenet Asia Pte Ltd.

Sources:

WiseNet Asia. (2017). China Insight: Bridging the gaps between China and Foreign Investments in Belt & Road Initiative (BRI) – WiseNet Asia. [online] Available at: http://wisenetasia.com/china-insight-bridgingbri/China-trade-research.hktdc.com. (2017).

The Belt and Road Initiative | HKTDC. [online] Available at: http://china-trade-research.hktdc.com/business-news/article/The-Belt-and-Road-Initiative/The-Belt-and-Road-Initiative/obor/en/1/1X000000/1X0A36B7.htmCia.gov. (2017).

The World Factbook — Central Intelligence Agency. [online] Available at: https://www.cia.gov/library/publications/the-world-factbook/fields/2111.html

Navigating Asia Pacific, China’s One Belt & One Road Initiative. (2017). 1st ed. CIMB, p.58.

En.wikipedia.org. (2017). China–Pakistan Economic Corridor. [online] Available at: https://en.wikipedia.org/wiki/China%E2%80%93Pakistan_Economic_Corridor

Ft.com. (2017). China encircles the world with One Belt, One Road strategy. [online] Available at: https://www.ft.com/content/0714074a-0334-11e7-aa5b-6bb07f5c8e12

(“ASEANstats Official Web Portal”, 2018)