BOFIT Viikkokatsaus / BOFIT Weekly Review 2017/20
The "One Belt, One Road" (OBOR) summit was held in Beijing on May 14–15. The meeting featured delegations from over 100 countries, as well as the IMF, the World Bank and UN leadership. President Xi Jinping called OBOR the "project of the century," as OBOR seeks to significantly increase investment in infrastructure and cooperation in Asia, Europe, as well as eastern and northern Africa. During the meeting, China promised a total of 580 billion yuan ($84 billion) in new funding for OBOR projects to be channelled via the Silk Road Fund, the Asian Infrastructure Investment Bank (AIIB) and China's policy banks. China will also set up a separate investment fund to provide financing for projects that support cooperation in northeast China and the Russian Far East.
The OBOR project is basically an umbrella term covering a range of potential projects rather than a well-defined list of actual investment projects. To date, at least 1,700 projects have been started or green-lighted in OBOR's name and have been allocated hundreds of billions of yuan in credit. The cost of financing is cheap. While some projects would very likely be implemented without OBOR support, others seem to lack viable economic basis.
China emphasises the economic benefits of the OBOR project will benefit all participating parties. At the same time, it is clear that the project increases Chinese influence in the region and creates demand for products made by branches in China now suffering from overcapacity. The OBOR project has been criticised for its lack of transparency and lop-sided treatment of foreign companies willing to participate in projects. As a result, numerous countries including Germany and France were unwilling to sign all of the summit's final communiques. The project is not considered as a geopolitical smash hit by all parties. India boycotted the summit and criticised the project as neo-colonialism. Russia is concerned that the project will increase Chinese influence in several former Soviet Union countries.