China is on the move again. The country’s economy may have slowed, but that doesn’t mean Beijing is sitting still about it. Instead, China is pushing ahead with a project that President Xi Jinping first revealed while visiting Kazakhstan last year.
The “New Silk Road” is the target of a $40 billion fund aimed at financing the construction of infrastructure that will link China with three continents over land and sea, with railroads, pipelines and roadways reviving trade both overland and along shipping routes in an echo of the original Silk Road.
Xi made the announcement about the fund at a meeting with the heads of Bangladesh, Cambodia, Laos, Mongolia, Myanmar, Pakistan and Tajikistan, along with representatives of the United Nations Economic and Social Commission for Asia and the Pacific and the Shanghai Cooperation Organization.
The fund is to be overseen by Chinese policy banks, but is not the only part of the plan. In two separate initiatives, the “Silk Road Economic Belt” and the “21st Century Maritime Silk Road,” the money will provide investment and financing support to carry out infrastructure, resources, industrial cooperation, financial cooperation and other projects related to connectivity, according to the Chinese news agency Xinhua.
Building plans won’t be confined to the Chinese provinces close to other countries, either, but will also be encouraged in those countries by new policies designed to spur Chinese lenders to step outside both comfort zones and geographic boundaries to finance development. The government also plans to convince Chinese companies that investment in those other countries is good business.
Only a few days after the announcement about funding, the China Securities Journal, a media outlet for the Chinese government, built on the news with the revelation that China is establishing a new bank to fund New Silk Road developments.
The Marine Silk Road Bank is to have a minimum in paid-in capital of 5 billion yuan ($816.23 million), and will be funded by the Marine Silk Road Investment Management Fund and ASEAN member countries. China’s $40 million fund is just the first contribution, and according to a report from the Asian Development Bank, Asia as a whole is in need of infrastructure investments of up to $730 billion annually before 2020.
As an example of what kinds of development could be in store for the countries along the New Silk Road, Kazakhstan is already in the midst of construction on a dry port and rail yard at Khorgos, a city on the country’s eastern border with China. It aims to shave days off its already-shorter rail route to Europe from China at a cost of $44 billion over the next five years.
While China is also looking to ramp up its sea trade, in some cases overland routes are just more efficient; Kazakhstan is an example. Maritime shipments of manufactured goods from China to Europe can take up to two months to reach their markets by sea, but the train can cut that time to two weeks. The Kazakhstan project is designed to trim another four days from the factory-to-retail journey.
The Maritime Silk Road, meanwhile, will begin near Guangdong on the South China Sea and, moving through the Malacca Strait and Indian Ocean, find its way around Cape Horn, thence to the Red Sea and the Mediterranean. It will finish up in the centuries-old trade city of Venice, which in Marco Polo’s day served as the jumping-off point for trade with Asia.