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Economy / Featured News / Mongolia News / November 13, 2014

China to create US$40 billion Silk Road Fund to upgrade Asia links

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Xi pledges to break ‘connectivity bottleneck’ with infrastructure project that will help Eurasian countries and counter US influence.

China will put US$40 billion (HK$310 billion) into a Silk Road Fund to improve infrastructure links across the Asia-Pacific, President Xi Jinping announced yesterday.

Addressing the leaders of Bangladesh, Cambodia, Laos, Mongolia, Myanmar, Pakistan and Tajikistan at a meeting in Beijing on Asia-Pacific development, Xi said the fund’s goal was to “break the connectivity bottleneck” in the region.

Analysts said the fund was intended to serve as a challenge to the United States’ renewed focus on Asia.

Xi said the fund would be used to provide investment and financing for infrastructure and resources, and to boost industrial and financial cooperation to forge better links between countries along the “new Silk Road”. It is part of Beijing’s strategy for an economic bloc to revive trade along the route between China and the Mediterranean.

The fund will be “open” to active participation by investors from both within and outside of Asia, and “such a framework accommodates the needs of various countries and covers both land and sea-related projects”, Xinhua quoted Xi as saying.

Representatives of the United Nations Economic and Social Commission for Asia and the Pacific and the Shanghai Cooperation Organisation also attended the meeting.

Zhou Fangyin , a professor at the Guangdong Research Institute for International Strategies, said the fund, which is expected to help more than 60 Eurasian countries upgrade their infrastructure, was designed to burnish China’s international image by projecting it as a responsible international player.

“The announcement of the Silk Road Fund indicates that Xi is really taking action on China’s Silk Road strategy, which he first raised in September last year. It comes as many Asian countries doubt China’s claim to be a peace-loving and responsible superpower,” Zhou said.

“The Silk Road strategy aims to challenge US President Barack Obama’s ‘pivot to Asia’ by using the lure of trade and investment. I think it will be quite effective as many Asian countries are keen to develop infrastructure but struggle to do so because of a lack of capital and technology.”

Zhou said Xi also hoped the Silk Road strategy, which aims to put China at the centre of the Asian economic zone, would drive broad-based development in border areas like Xinjiang , Tibet and Yunnan through the development of high-speed railways and international ports.

Qiao Mu , dean of the Centre for International Communication Studies at Beijing Foreign Studies University, said financial incentives were the “easiest and the most effective way” for China to improve its relationship with its neighbours, but the strategy posed a threat at home.

“I am afraid that such a generous investment will trigger public anger as our education and medical sectors also need financial support,” Qiao said.

“China has too much money – its foreign reserves are near US$4 trillion … But Chinese taxpayers can’t check whether the government spends the money in a useful way due to the current political system.”

SOURCE: South China Morning Post

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