According to the Asian Development Bank (ADB), Asia faces an infrastructure funding gap of estimated USD 26 trillion through 2030. To address this gap, various regional and sub-regional initiatives aim to develop better transport connectivity within Asia. This includes, among others, the Association of South East Asian Nation (ASEAN) Connectivity initiative, the Central Asia Regional Economic Cooperation (CAREC) Program, the Greater Mekong Sub-Region (GMS) Cooperation Program, the South Asia Sub-regional Economic Cooperation (SASEC) Program, and the Belt and Road Initiative (BRI).
BRI is a transcontinental long-term policy and investment program which aims at infrastructure development and acceleration of the economic integration of countries along the route of the historic Silk Road. The Initiative was unveiled in 2013 by China`s president Xi Jinping and until 2016, was known as OBOR – One Belt One Road. On March 28, 2015, the official outline for the Belt and Road Initiative was issued by the National Development and Reform Commission (NDRC), the Ministry of Foreign Affairs (MOFA) and the Ministry of Commerce (MOFCOM) of the People`s Republic of China (PRC), with authorization of the State Council.
Aims of the Belt and Road Initiative
According to the official outline, BRI aims to “promote the connectivity of Asian, European and African continents and their adjacent seas, establish and strengthen partnerships among the countries along the Belt and Road, set up all-dimensional, multi-tiered and composite connectivity networks, and realize diversified, independent, balanced and sustainable development in these countries.”
BRI is a global initiative but by its nature of building on the historic Silk Road puts a major focus on countries in Asia, Eastern Africa, Eastern Europe and the Middle East, a region mainly composed of emerging markets. According to the Belt and Road Portal, currently 71 countries are taking part in the Initiative, together representing more than a third of the world`s GDP and two thirds of the world`s population.
The Belt and Road Initiative combines two initiatives
1. The (land based) Silk Road Economic Belt, comprising six development corridors
2. The 21st Century Maritime Silk Road
The Silk Road Economic Belt
The Silk Road Economic Belt is a long-term vision for the infrastructural development, connectivity and economic cooperation of Eurasia and is spanning six development “corridors”, namely:
1. New Eurasian Land Bridge Economic Corridor (NELBEC)
2. China – Mongolia – Russia Economic Corridor (CMREC)
3. China – Central Asia – West Asia Economic Corridor (CCWAEC)
4. China – Indochina Peninsula Economic Corridor (CICPEC)
5. Bangladesh – China – India – Myanmar Economic Corridor (BCIMEC)
6. China – Pakistan Economic Corridor (CPEC)
The 21st Century Maritime Silk Road
The 21st Century Maritime Silk Road connects China to Southeast Asia, Indonesia, India, the Arabian peninsula, Somalia, Egypt and Europe, encompassing the South China Sea, Strait of Malacca, Indian Ocean, Gulf of Bengal, Arabian Sea, Persian Gulf and the Red Sea.
The Polar Silk Road
On January 26, 2018, the State Council Information Office of the People`s Republic of China published a white paper, titled “China`s Arctic Policy”, vowing to actively participating in Arctic affairs. The document is a blueprint for China`s Arctic strategy and its ambition to develop a “Polar Silk Road” under the “Belt and Road Initiative”.
The land based Silk Road Economic Belt, the 21st Century Maritime Silk Road and the Polar Silk Road can not be considered separately and need to be understood as complement to each other regarding the strategic integration of the regions under BRI.
The official Belt and Road Initiative outline promotes the joint formulation of development plans and measures for advancing cross-national or regional cooperation between countries involved in BRI. This includes intergovernmental cooperation and multi-level macro policy exchange, communication mechanisms and policy support for the implementation of large-scale projects and the coordination in monetary policy.
According to the outline, the Belt and Road Initiative is based on five cooperation priorities:
1. Policy coordination (Promotion of intergovernmental cooperation, multi-level intergovernmental macro policy exchange and communication mechanism)
2. Facilities connectivity (Improvement of connectivity of infrastructure construction plans and technical standards systems)
3. Unimpeded trade (Reduction of investment and trade barriers, promotion of regional economic integration)
4. Financial integration (Coordination and cooperation in monetary policy, set-up of financing institutions)
5. People-to-people bonds (Cultural and academic exchange and dialogue, media cooperation)
Coordination of the Initiative
The Belt and Road Initiative has no formal institutionalized body and its implementation includes multiple actors and stakeholders.
The overseeing body of BRI is the “Office of the Leading Group on Promoting the Implementation of Belt and Road Initiatives” which is under the National Development and Reform Commission (NDRC). The leading group is in charge of guiding and coordinating work related to the initiative. Chair of the leading group is Han Zheng, Executive Vice Premier of the State Council. Deputy head of the leading group is Hu Chunhua, Vice Premier of the State Council.
An important role in the implementation of BRI plays China`s new State International Development Cooperation Agency (SIDCA). The agency was unveiled on April 18,2018 and will be responsible for strategic guidelines and policies on foreign aid. SIDCA will be answerable to the State Council and according to State Council “will better serve the country’s global strategy and to build the Belt and Road Initiative”.
Various Chinese governmental agencies are involved in the formulation and implementation of BRI, including the National Development and Reform Commission (NDRC), the Ministry of Commerce (MOFCOM), the Ministry of Foreign Affairs (MOFA) or the Ministry of Culture (MoC).
To complement the BRI blueprint, almost all provinces in China such as Hebei or Henan have elaborated own BRI implementation plans.
Selected BRI policies and guidelines can be found here.
Funding of the Initiative
The funding of the Belt and Road Initiative will be secured by various institutional mechanisms such as:
1. Policy Banks
Agricultural Development Bank of China (ADBC)
China Development Bank (CDB)
Export-Import Bank of China (CHEXIM)
2. State Owned Banks
Agricultural Bank of China (ABC)
Bank of China (BOC)
China Construction Bank (CCB)
Industrial and Commercial Bank of China (ICBC)
3. State Owned Funds (selection)
China Investment Corporation (CIC)
Silk Road Fund (SRF)
4. International Financing Institutions (selection)
Asian Development Bank (ADB)
Asian Infrastructure Investment Bank (AIIB)
New Development Bank (NDB)
To fully fund the total BRI project volume of estimated USD 4 to 8 trillion, diverse funding channels such as BRI bonds, private capital investment and public-private partnerships (PPP) but also State-Owned Enterprise (SOE) investment will be crucial for the success of the Initiative.