When Chen Bingcai said China had US$3 trillion in foreign reserves during a forum in Nanning on the One Belt One Road project for Asian journalists earlier this year, he was trying to show that his government had a large enough piggy bank to undertake the gargantuan project.
“We can utilise the US$3 trillion which we collected over the last 30 years,” said the deputy director of the training department in the Chinese Academy of Governance. As a comparison, Asean’s collective GDP for 2014 was US$2.57 trillion.
One Belt One Road is a reference to the Silk Road Economic Belt and the 21st Century Maritime Silk Road. This is China’s grand economic strategy and a solution for domestic overcapacity by opening foreign markets and connecting economically with Europe and all the other parts of Asia – West, Central, South and Southeast. It is estimated to cover 4.4 billion people (63 percent of world population) and US$2.1 trillion gross production (29 percent of world GDP).
China is leveraging on its strength in financial resources to get this project off the ground. China will be spending over US$200 billion on the One Belt One Road by 2018. The government plans to do this by increasing its capital allocation from 15 to 30 percent over the next three years.
On top of that, China recently contributed US$40 billion to its new Silk Road Fund, designed to improve trade and transport links in Asia. There is also the Maritime Silk Road Bank, which hopes to attract US$16 billion in investment.
Then there are the two major multilateral institutions, namely, the Asian Infrastructure Investment Bank (AIIB) with US$100 billion initial equity, and the New Development Bank with US$50 billion equity proposed by BRICS countries, headquartered in Beijing and Shanghai respectively.