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BACKLASH COULD COST XI JINPING'S BELT AND ROAD $800 BILLION, REPORT SAYS

2019-09-26 15:34:16

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BACKLASH COULD COST XI JINPING'S BELT AND ROAD $800 BILLION, REPORT SAYS 

 

The most pessimistic scenario is investment might only reach around $560 billion, as per a report. 

 

The World Bank has suggested China’s current spending totals around $575 billion, but predicting future investments by Xi’s notoriously opaque government over a decade is difficult. 

 

A new report suggested the backlash to China’s political and trade policies could shave as much as $800 billion off investment in President Xi Jinping’s signature Belt and Road Initiative, amid mounting concerns about the geopolitical price of doing business with Beijing. 

 

The report published Wednesday from consultancy Silk Road Associates and law firm Baker McKenzie outlined five scenarios for future BRI investment. The most optimistic is a “global cooperation model” that sees China spending more than $1.3 trillion globally between 2020 and 2030. 

 

The most pessimistic is “uni-polar” and weighs the impact of a recession, growing nationalism and more aggressive competition, predicting investment might only reach around $560 billion. 

 

The report’s release came as Hong Kong kicked off a Belt and Road investment summit Wednesday attended by several Chinese officials, one of whom urged the city’s residents to stop protesting and seize the opportunities offered through China’s regional infrastructure spending plans. The Asian financial hub has seen months of unrest that have taken a toll on its economy, including tourism and retail. 

 

With more than 130 countries reported to have signed up to the initiative, estimates for China’s current BRI investments vary wildly -- from hundreds of billions of dollars to as much as $8 trillion. 

 

The World Bank has suggested China’s current spending totals around $575 billion, but predicting future investments by Xi’s notoriously opaque government over a decade is difficult. Political opposition to projects in Sri Lanka and Malaysia, among other countries, has led to some projects being revised, curtailed or canceled, making investments even more difficult to track.

 

The Asian Development Bank has previously estimated developing countries in Asia need around $26 trillion worth of infrastructure investments between 2016 and 2030.

 

These are the five scenarios outlined in the report: 

Value: $910 billion. Investments stay on the current trajectory and track closely with the current trend of more projects, but smaller average values. 
Value: $1.32 trillion. China learns its lessons, reduces political opposition to big infrastructure projects, and negotiates more multilateral funding sources. 
Value: $1.2 trillion. A focus on sustainability helps secure new funding sources and helps Chinese firms win major clean energy and water projects.
Value: $1.06 trillion. U.S.-China trade tensions persist, leading to a greater exodus from China. Relocated manufacturing centers in Southeast Asia spur Chinese infrastructure investments there. 
Value: $560 billion. Political opposition and trade protectionism limit the size and geographic spread of China’s infrastructure investments.