AIIB Plans $100bn Release for ‘One Belt One Road’
One Belt, One Road is a Chinese foreign policy initiative promoted by president Xi Jinping and sometimes known as China’s answer to the Marshall Plan (although Beijing rejects that analogy).
The numbers are impressive: $40bn from the new Silk Road Fund, to support private investment; not to mention the lion’s share of the expected $100bn to be dispersed from the new China-led Asian Infrastructure Investment Bank (AIIB).
So far there is little indication of where the money might flow, or how to tap it.
The confusion starts with the name itself. One Belt refers to what was historically called the Silk Road, stretching from China through central Asia. One Road refers to a “maritime road” which more or less draws inspiration from the voyages through Southeast Asia to the east coast of Africa by Zheng He, the eunuch admiral of the Ming Dynasty.
In the absence of concrete plans, international enthusiasts are left to fill in the blanks.
In September Xi Jinping visited ethnically divided Xinjiang on China’s borders with central Asia to evoke the Silk Road. While there, he announced £60m of investment into real estate projects in Manchester and Sheffield by the Hualing Group, known for developing wholesale markets in Xinjiang.
Pak-China Link up
But when it comes to committing their money overseas, Chinese business people have so far been more cautious than international politicians. There are very few identifiable One Belt, One Road projects outside China’s borders. The exceptions are a slew of Chinese investments announced for Pakistan, where 51 memoranda of understanding were signed during an April visit by President Xi, and a steel mill that state-owned Hebei Iron and Steel proposes to build in South Africa.
The AIIB could fill in the gaps once it is up and running, but details of how it will operate are still to be finalised.
Another concern for Chinese companies is the security of any investment. After the fall of the Soviet Union, European companies led by oil investors had to develop investment protocols to bridge central Asian countries’ Soviet-based legal and corporate structures with western corporate norms.
China is now developing similar protocols to support an expected influx of Chinese investment to the region.