Xi’s US$113b pledge ‘more seed fund than credit pipeline’
Asia must spend tens of trillions of dollars by 2030 to develop infrastructure and maintain growth while reducing poverty, according to estimates
Chinese President Xi Jinping’s pledge to invest at least 780 billion yuan (US$113 billion or HK$880 billion) via its state funds and banks to finance projects in the “Belt and Road Initiative” is more of a seed fund than a credit pipeline for the ambitious plan to expand China’s economic and potentially political influence in nearly 70 countries in Asia, Europe and Africa.
The fund’s size, though large at face value, is tiny compared to China’s grand plan. Asia alone needs to spend US$8 trillion on infrastructure by 2020, the Asian Development Bank estimates. It also says Asia needs to spend US$26 trillion by 2030 to maintain growth, reduce poverty and respond to climate change.
Huo Jianguo, former chief of the Ministry of Commerce’s research institute, said the promised fund was just a sign of China’s commitment to help develop the countries that are in the belt and road plan and more capital from other multilateral lenders and the private sector were needed.
“China also could issue special bonds or other financial products to usher more Chinese capital into belt and road countries,” he said.