Daily Management Review

Trillions Could Be The Cost Of China's Plan To Develop Asian Infrastructure, Right Now There's Enough Money


06/26/2017




Trillions Could Be The Cost Of China's Plan To Develop Asian Infrastructure, Right Now There's Enough Money
Representatives from Beijing said in New York last week that China’s flagship One Belt, One Road infrastructure program has far from enough financing right now.
 
Similar to the ancient "Silk Road" that connected Asia with Europe, an ambitious initiative to build a network of infrastructure in underdeveloped regions south and west of China was forst announced in 2013 by Chinese President Xi Jinping.
 
Announcing that China will contribute an additional 100 billion yuan ($14.68 billion) to the Silk Road Fund, Xi kicked off a high-profile "Belt and Road Forum for International Cooperation" in Beijing this May. Special financing worth a total of 380 billion yuan will be set up by the China Development Bank and the Export-Import Bank of China, he said.
 
 Wei Jianguo, vice chairman of the board for the China Center for International Economic Exchanges, a think tank with close ties to the Chinese government said that despite those announcements, "there's a very big gap there."
 
Forecasts keep climbing even as the estimated cost for One Belt, One Road is in the trillions of dollars. In order to maintain growth momentum, eradicate poverty and tackle climate change, developing Asia will need to invest $1.7 trillion a year, or about $26 trillion through to 2030, the Asian Development Bank had estimated which it doubled in a report published in February.
 
One Belt, One Road is a project Beijing initiated in the expectation that other countries will participate, Chinese leaders have emphasized.
 
Some help from other nations is however present in the project. according to an official Chinese media report earlier this year, nine projects with a total $1.73 billion have already been financed by the Asian Infrastructure Investment Bank, which China launched last year with major U.S. allies.
 
But Beijing is counting on private companies to pitch in to solve the bulk of the financing gap. According to Michael Hirson of Eurasia Group, investments of $50 billion by Chinese companies have already been made in the One Belt, One Road projects.
 
"I think we can only say the Belt and Road initiatives are only making progress when we see enterprises making progress," said Zhao Jinping, director of the research department of foreign economic relations in the development research center of the Chinese State Council.
 
Generating $1.6 billion in local tax revenue and creating 180,000 jobs, more than 1,000 companies invested in 56 projects in more than 20 countries, in the first three years of the program's existence, said Zhao citing official figures.
 
Addition to the economic growth in a similar way by other local companies participating in the program is expected by the Chinese officials.
 
"There's no way anyone can credibly promise that the Belt and Road project can generate that level of economic promise," Scott Kennedy, a China expert at the Center for Strategic and International Studies, said.
 
"It still sounds like China is in sales mode rather than serious analysis mode," he said. "People don't know what is a belt and road project and what is not."
 
37 pages on its website of proposed, ongoing and completed projects — mostly railways and highways — for One Belt, One Road have been listed by The Center for Strategic and International Studies.
 
While some U.S. firms such as General Electric are reportedly already involved with related projects, the U.S. sent a representative to attend the One Belt, One Road forum in May.
 
"As the content of the phrase has become enriched, it also will take some time for foreigners to understand what it's about," Zhao Qizheng, former Minister of the Chinese State Council Information Office, said at the press conference. "We can't tell you exact sums because that's going to vary from project to project."
 
(Source:www.cnbc.com) 






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