China to establish $ 40 b Silk Road infrastructure fund

Monday, 10 November 2014 00:00 - - {{hitsCtrl.values.hits}}

Reuters: China will contribute $ 40 billion to set up a Silk Road infrastructure fund to boost connectivity across Asia, President Xi Jinping announced on Saturday, the latest Chinese project to spread the largesse of its own economic growth. China has dangled financial and trade incentives before, mostly to Central Asia but also to countries in South Asia, backing efforts to resurrect the old Silk Road trading route that once carried treasures between China and the Mediterranean.

The fund will be for investing in infrastructure, resources and industrial and financial cooperation, among other projects, Xi said, according to Xinhua. The goal of the fund is to ‘break the connectivity bottleneck’ in Asia, state media quoted Xi as saying during a meeting in Beijing with leaders from Bangladesh, Cambodia, Laos, Mongolia, Myanmar, Pakistan and Tajikistan. The Silk Road Fund will be ‘open’ and welcome investors from Asia and beyond to ‘actively’ take part in the project, Xi was cited as saying, ahead of a separate summit of the Asia Pacific Economic Cooperation (APEC) grouping, also being held in the Chinese capital. It was not immediately clear precisely how the fund would work, when it would start operations or where it would be based, though in all likelihood it would be China. But Xinhua said it would focus on China’s Silk Road Economic Belt and the 21st Century Maritime Silk Road initiative, which aim to build roads, railways, ports and airports across Central Asia and South Asia. “Such a framework accommodates the needs of various countries and covers both land and sea-related projects,” Xi said, adding China is ready to welcome its neighbours “to get on board the train of China’s development.” China will also provide neighboring countries with 20,000 places for training ‘connectivity professionals’ over the next five years, Xi said. China has sought to address fears in the region – and globally – that its bounding economic growth will inevitably bring about a more assertive, muscular diplomatic and military approach to issues such as territorial disputes. One of the ways it has done this is to offer large loans to places like Southeast Asia and Africa, to show that China is a benign growing power only interested in helping others escape poverty in the way it has itself over the past three decades.

China president says risks to economy ‘not that scary’

Reuters: The risks faced by China’s economy are not that scary and the government is confident it can head off the dangers; President Xi Jinping told global business leaders on Sunday to dispel worries about the world’s second-largest economy. In a speech to chief executives at the Asia Pacific Economic Cooperation (APEC) CEO Summit, Xi said even if China’s economy were to grow 7%, that would still rank it at the forefront of the world’s economies. China’s economy, the world’s second-largest, has had a rocky year. Growth slid to a low not seen since the 2008/09 global financial crisis in the third quarter dragged by a housing slowdown, softening domestic demand and unsteady exports. “Some people worry that China’s economic growth will fall further, can it climb over the ridge?” Xi said. “There are indeed risks, but it’s not so scary. “Even at growth of around 7%, regardless of speed or volume, (we) are among the best in the world,” he said, noting that China’s economy remained ‘stable’. The remarks from Xi came a day after data showed annual growth in Chinese exports and imports cooled in October, in another sign of fragility in the economy that could prompt policymakers to take further action to stoke growth. To shore up activity, policymakers have loosened monetary and fiscal policies since April to ensure that the economy can grow by around 7.5% this year. Regional governments have accelerated spending on some infrastructure projects and abolished limits on the number of homes that Chinese can buy. The Central Bank has also injected short-term loans into banks to increase credit supply, and cut mortgage rates for some home buyers. Yet the results yielded have not been as good as some had hoped, fuelling speculation that China may have to cut interest rates or the reduce the amount of deposits that banks set aside as reserves – moves Beijing has denied are on the cards. Xi, who would sign off on any interest rate cut in China alongside the country’s elite decision-making Politburo, did not comment on the policy outlook, but stressed that his government was focused on reforms and that China was open for business.