Research conducted by FinanceAsia provides an interesting insight into the understanding of what the Belt and Road Initiative really is. In many cases, those impressions may not fit with reality.
Hailed by Chinese President Xi Jinping as project of the century, the plan fits into his bigger narrative that China will uphold the notion of globalisation across the developed world.
The plan, which will ease the infrastructure needs of developing countries, will provide a new engine of growth and drive prosperity of the countries along the Belt and Road.
To test the level of appetite from investors and corporation operating in Asia, FinanceAsia surveyed its readers on their expectations for the Belt and Road Initiative.
The survey discovered that sometimes the perception of what the Initiative is differs from the reality. For example, senior executives believe the majority of Belt and Road projects will occur in Central Asia. This will not be the case. Southeast Asia will be (and already is) the major recipient of investment.
We also found there is concern about how infrastructure projects in developing countries will be funded. This is a natural anxiety. According to Asian Development Bank, the emerging Asia and the Pacific Region is expected to need about US $26 trillion of infrastructure investment between now and 2030. That amounts to US $1.7 trillion per year, more than twice of what the ADB had forecast in 2009.
About 81% of the respondents expect Chinese capital will lead funding those infrastructure projects, according to the survey, namely policy lenders such as China Development Bank and the Export-Import Bank of China, as well as state-owned enterprises.
During his speech at the opening of the Belt and Road Forum for International Cooperation in May 2017, President Xi promised extra funding to bring the total funds pledged for the Initiative to US $113 billion, and urged countries across the globe to join hands with him in pursuit of globalisation.
The Belt and Road Initiative will require a broad spectrum of international and regional investors to put their capital to work in long-term projects through bank loans and bond markets. According to the survey, 70% of the respondents said the adoption of public-private partnerships will be the key funding model.
A total of 130 responses were collected for the research, which was carried out in mid-July for five days. Public-services and corporate sector represented 38.5% and 28.5% of the total feedback, with the remaining responses from banks (20%), investors (7.7%), law firms (2.3%) and others (3.1%).
