World politics: Quick View - Inaugural Belt and Road Forum held in Beijing
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On May 14th the Chinese president, Xi Jinping, addressed the inaugural Belt and Road Forum (BRF) for International Co-operation in the capital, Beijing.
The hosting of the high-profile event underlines China's seriousness about its push to deepen regional trade and investment links. The forum is meant to represent a scaling up of China's diplomatic trade initiative, known as the Silk Road Economic Belt and 21st Century Maritime Silk Road (Belt and Road Initiative, BRI, formerly called One Belt, One Road). Launched by Mr Xi in 2013, the project aims to integrate and develop countries economically along ancient trading routes linking China with the world, mainly through building physical infrastructure. In his speech, Mr Xi called it "the project of the century".
Mr Xi promised additional loans and grants of around Rmb540bn (US$77.1bn) for the initiative at the BRF. The China-based Silk Road Fund, set up in 2014 with capital of US$40bn, will receive Rmb100bn for renminbi-denominated lending, while China's major policy banks, China Development Bank and Export-Import Bank of China, will provide the equivalent of Rmb250bn and Rmb130bn, respectively, in financing to projects across BRI countries over an unspecified timeline. Mr Xi also said that Rmb60bn in aid would be provided for "livelihood projects" included in the BRI.
Besides financing, announcements at the BRF showed that China is looking to build some governance architecture around BRI. It will set up a mechanism to facilitate high-level co-ordination, as well as dedicated centres for finance and economics development, construction promotion and multilateral development financing collaboration. These steps will only partially ease international concerns about the transparency of the initiative. Separately, several bilateral trade and investment deals were signed on the sidelines of the BRF.
To date, the BRI has been more rhetoric than action, but the high-level political support on display at the BRF suggests that the Chinese government will push the initiative aggressively. There are significant risks, given often unstable operating environments in the more than 60 countries in the BRI and the likelihood of low returns on several projects. However, Mr Xi's government has clearly decided that the potential benefits of the scheme-geopolitical as well as economic-are worth bearing. This promises a significant boost in the financing available for infrastructure development across the region.
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