China’s Master Plan to link Asia, Europe

On Christmas Day in 2015, 17 nations signed an agreement to establish the Beijing-sponsored Asian Infrastructure Investment Bank (AIIB). Within a week, the world’s latest multilateral bank was open for business. It now has 57 members.
Addressing the Asian Financial Forum in Hong Kong in January, China’s Vice-Minister for Foreign Affairs, Liu Zhenmin, told the audience: “AIIB is going to facilitate mutual access in the region for economic growth. A good start means half of the success.“
The AIIB has been set up to fund infrastructure development, especially the so-called One Belt, One Road and Maritime Silk Road initiatives — both brainchilds of Chinese leader Xi Jinping, who proposed them in 2013.
Liu describes the Belt and Road initiative as a new economic force for China. He says it will further drive China’s economic development, and that China plans to use the two initiatives to deepen economic integration with some 60 countries along the route. He adds that the AIIB is poised to approve the first batch of projects earmarked for the One Road, One Belt and Maritime Silk Road projects.
His comments were later echoed by the Bank’s President, Jin Liqun, who foreshadowed that a lending programme of at least US$2 billion will be implemented later this year. Jin was speaking with international media at the margin of the World Economic Forum in Davos.
Jin said the first round of lending is to be
finalised by June.
The AIIB expects to lend US$10-15 billion per annum for the first five or six years. Russia is at the front of the queue for financing of $1 billion worth of projects.
Ministers from member countries, including Luxembourg, Russia and Sweden, had been
invited to Beijing for the AIIB’s inauguration ceremony and they stopped over in Hong Kong in January for the Asian Financial Forum.
Pierre Gramega, Finance Minister of Luxemborg, one of the first countries to apply for membership to AIIB, likens the organisation to the European Union’s Junker Investment Plan, which aims to lift investment in the EU. “The One Belt, One Road initiative embodies the same spirit,” he says, adding that he hopes the AIIB can work together with the Juncker Plan.
The policymakers and planners of the ambitious One Belt, One Road and Maritime Silk Road projects have outlined six international economic co-operation corridors and five routes crisscrossing the huge landmass of Asia and the maritime States of Southeast Asia. The idea is to take advantage of international transport routes as well as core cities and key ports.
The six corridors have been identified as the New Eurasia Land Bridge, China-Mongolia-Russia, China-Central Asia-West Asia, China-Indochina Peninsula, China-Pakistan, and Bangladesh-China-India-Myanmar.
Liu Zhenmin, who was a keynote speaker at the AFF, said China and Russia have signed an agreement to develop a Silk Road Economic Zone. He spoke of a road map that is being drawn up for the development of nodes along a route through Inner Mongolia and Russia. These will include sea ports and industrial and cross-border parks.
Bilateral agreements to co-operate on the development of infrastructure will be signed with countries along the routes.
“Shanghai is going to be the main platform for promoting this co-operation,” says Liu, adding that there are also plans to set up investment and funding entities with Europe to
finance development of productive capacity across regions covered by the initiative.
As well as the AIIB, China has set up a US$40 billion Silk Road Fund. This will invest mainly in infrastructure, and resource and industrial and financial co-operation. “Demand for further mutual access and co-operation is rising,” Liu says. “Because of this, we are exploring a mutual access plan with East Asian countries as well as pan-Asian collaboration.”
ASEAN  will be at the core of the development, but at the same time, China has negotiations under way for Free Trade Agreements with Korea and Japan  “We should expedite trade co-operation with Japan and Korea,” says Liu. FTAs are important, he adds, as they promote balanced growth in terms of trade and free flow of investment.
One Belt, One Road is going to be a multi-country development, he says, adding that there is “steady progress” in terms of trade negotiations. He mentions the intention to conclude the Regional Comprehensive Economic Partnership (RCEP), an FTA with ASEAN and its FTA partners (Australia, China, India, Japan, South Korea and New Zealand) by the end of this year.
China is forging closer linkages with Southeast Asia, Liu says, pointing to its involvement with the Greater Mekong Sub-Region.
“We are closely connected to neighbouring countries and  we have to show concerted efforts to achieve opportunity through improving connectivity and better infrastructure.”
Liu says China’s objective is to extend and strengthen co-operation on development, communications, and exchange of talent and people. “We see a lot of advantages in talent co-operation and the promotion of education and tourism. We all share the same goal.”
He envisages this co-operation revolving around construction of industrial parks, communications, agriculture, manpower and so on.
“We want to promote regional financial stabi-lity and better risk control management.  China hopes to promote development of an Asian
financial co-operation organisation,” he says.
Liu speaks of establishing an entity to promote development of an Asian bond market. All of these initiatives will be critical for the success of the One Belt, One Road programme.
The AIIB plans to go to the market to raise between US$300 million and US$500 million by selling bonds in April or May.
“We have to be confident in the development of Asia,” says Liu. “The region is still the most vibrant in the world. We are able to maintain higher growth with co-operation with ASEAN and other neighbouring countries.”
He adds that economic co-operation will “inject more vitality into our economies”.
As Liu sees it, the Belt and Road initiative promises a “very prosperous trend” for East Asian co-operation,with further economic integration into central Asia and beyond. “We are confident of a mid- to high-growth rate for our economies,” he says.
Liu adds: “About 70 countries and organisations have joined One Belt, One Road. It is not a solo play. Rather, it is a chorus of all members along the route.”