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6 White Paper on the Business Environment in China
ation with India, Russia, Brazil, and South Africa. And there strategy ever since President Xi Jinping first broached the “New
are the individual Chinese development banks, too – the China Silk Road Economic Belt” idea in his speech in Kazakhstan on
Development Bank, which has $100 billion in capital, and the September 7, 2013.11
Export Import Bank of China. These banks already give more
loans to Asia and Latin America than institutions like the World The plan envisions an economic cooperation bloc from
Bank, the Asian Development Bank, and the Inter-American China through to the Mediterranean that revives the old Silk
Development Bank. Road trading route. Bloomberg indicates that according to
a map published on the website of the official Xinhua News
Of course, this isn’t completely altruistic. China is hoping Agency in May 2014, the land-based Silk Road starts from Xi’an,
that a good chunk of the infrastructure work will be done by stretching west through Lanzhou and Urumqi before running
Chinese companies, to deal with its over-capacity problem in southwest across Central Asia, the Middle East and Europe.
heavy equipment manufacturing and construction. The sea-based Maritime Silk Road goes through Guangdong
and Hainan en route to the Malacca Strait and Indian Ocean,
We would like to think that these different efforts may be traversing the Horn of Africa before entering the Red Sea and
complementary. As foreign policy expert David Dollar opines Mediterranean. Both roads end up in Venice.11
in a paper in The Brookings Institute, a think tank: “The kind
of infrastructure financed by the Chinese initiatives is the Guangdong in early November 2014 already hosted the in-
“hardware” of trade and investment, which are necessary but augural international expo for the maritime Silk Road, with 42
not sufficient to deepen integration. TPP, on the other hand, countries participating.11
represents the “software“ of integration, reducing trade barriers,
opening up services for trade and investment, and harmonizing President Xi has also already ramped up efforts to sell his new
various regulatory barriers to trade.” 6 strategy overseas. One month after his Kazakhstan speech, when
addressing the Indonesian parliament in Jakarta, he pitched “the
Mr. Dollar observes that there could be “ a risk that the com- 21st Century Maritime Silk Road.” During state visits in 2014,
peting initiatives of China and the United States will lead to he secured verbal commitments from three countries along the
regional blocs and a disintegration of trade, but it is more likely routes -- Tajikistan, the Maldives and Sri Lanka, while both In-
that Sino-American competition will lead to strengthened in- dia and Afghanistan have reportedly expressed interest. 11
stitutions and deeper integration throughout Asia-Pacific.” We
would like to think so too. 6 The president has not hesitated to back up the plan with
the appropriate funding – as of November 2014, media reports
What The Other MDBs Are Saying: announced that China is planning a US$16.3 billion fund to fi-
nance construction of infrastructure linking its markets to three
More funding for infrastructure will help the poor, and continents along the New Silk Road route. 11. He also allocated
we are pleased to be working with China and others US$50 billion in October to establish an Asian Infrastructure
to help the AIIB hit the ground running. We view the Investment Bank to lend money to build roads, railways and
AIIB as an important new partner that shares a com- other transport links in poorer parts of Asia. 12
mon goal: ending extreme poverty. The AIIB will join
us and other development banks in addressing the huge Experts expound on the New Silk Road plan’s significance,
infrastructure needs that are critical to ending poverty, that this could mean “a shift in China’s strategic thought,”
reducing inequalities and boosting shared prosperity. says Zhang Yunling, director of the Institute of Asia-Pacific
Jim Yong Kim, World Bank president 5 Studies at the Chinese Academy of Social Sciences. To
Bloomberg, Mr. Zhang added that: “The past three decades of
The Asian Development Bank is committed to work- China’s development have been focused on ‘absorbing foreign
ing closely and co-financing with the AIIB to address investment’ and the next step will be about the outflow of
the vast infrastructure needs facing Asia by using our Chinese development to its neighbors.” 11
long experience and expertise.
Takehiko Nakao, ADB president 5 Yuan Inclusion in IMF’s SDR
The “New Silk Road”: Background On November 30, 2015, the IMF announced that China’s
currency, the yuan, is to be included in the basket of currencies
(This section “The New Silk Road” is incorporated from our 2015 which make up the IMF’s Special Drawing Right, or SDR. On
White Paper.) October 1st, 2016, the IMF will then add the yuan to its SDR
basket with a weighting of 10.92%, as the currency has “met all
The New Silk Road plan, comprising both a land-based path existing criteria.” The weighting of the other currencies in the
and a maritime route, has been referred to as a Chinese national basket is 41.73% (USD), 30.93% (EUR), 8.33% ( JPY) and
8.09% (GBP). This is the first time in over 15 years that the list
54
ation with India, Russia, Brazil, and South Africa. And there strategy ever since President Xi Jinping first broached the “New
are the individual Chinese development banks, too – the China Silk Road Economic Belt” idea in his speech in Kazakhstan on
Development Bank, which has $100 billion in capital, and the September 7, 2013.11
Export Import Bank of China. These banks already give more
loans to Asia and Latin America than institutions like the World The plan envisions an economic cooperation bloc from
Bank, the Asian Development Bank, and the Inter-American China through to the Mediterranean that revives the old Silk
Development Bank. Road trading route. Bloomberg indicates that according to
a map published on the website of the official Xinhua News
Of course, this isn’t completely altruistic. China is hoping Agency in May 2014, the land-based Silk Road starts from Xi’an,
that a good chunk of the infrastructure work will be done by stretching west through Lanzhou and Urumqi before running
Chinese companies, to deal with its over-capacity problem in southwest across Central Asia, the Middle East and Europe.
heavy equipment manufacturing and construction. The sea-based Maritime Silk Road goes through Guangdong
and Hainan en route to the Malacca Strait and Indian Ocean,
We would like to think that these different efforts may be traversing the Horn of Africa before entering the Red Sea and
complementary. As foreign policy expert David Dollar opines Mediterranean. Both roads end up in Venice.11
in a paper in The Brookings Institute, a think tank: “The kind
of infrastructure financed by the Chinese initiatives is the Guangdong in early November 2014 already hosted the in-
“hardware” of trade and investment, which are necessary but augural international expo for the maritime Silk Road, with 42
not sufficient to deepen integration. TPP, on the other hand, countries participating.11
represents the “software“ of integration, reducing trade barriers,
opening up services for trade and investment, and harmonizing President Xi has also already ramped up efforts to sell his new
various regulatory barriers to trade.” 6 strategy overseas. One month after his Kazakhstan speech, when
addressing the Indonesian parliament in Jakarta, he pitched “the
Mr. Dollar observes that there could be “ a risk that the com- 21st Century Maritime Silk Road.” During state visits in 2014,
peting initiatives of China and the United States will lead to he secured verbal commitments from three countries along the
regional blocs and a disintegration of trade, but it is more likely routes -- Tajikistan, the Maldives and Sri Lanka, while both In-
that Sino-American competition will lead to strengthened in- dia and Afghanistan have reportedly expressed interest. 11
stitutions and deeper integration throughout Asia-Pacific.” We
would like to think so too. 6 The president has not hesitated to back up the plan with
the appropriate funding – as of November 2014, media reports
What The Other MDBs Are Saying: announced that China is planning a US$16.3 billion fund to fi-
nance construction of infrastructure linking its markets to three
More funding for infrastructure will help the poor, and continents along the New Silk Road route. 11. He also allocated
we are pleased to be working with China and others US$50 billion in October to establish an Asian Infrastructure
to help the AIIB hit the ground running. We view the Investment Bank to lend money to build roads, railways and
AIIB as an important new partner that shares a com- other transport links in poorer parts of Asia. 12
mon goal: ending extreme poverty. The AIIB will join
us and other development banks in addressing the huge Experts expound on the New Silk Road plan’s significance,
infrastructure needs that are critical to ending poverty, that this could mean “a shift in China’s strategic thought,”
reducing inequalities and boosting shared prosperity. says Zhang Yunling, director of the Institute of Asia-Pacific
Jim Yong Kim, World Bank president 5 Studies at the Chinese Academy of Social Sciences. To
Bloomberg, Mr. Zhang added that: “The past three decades of
The Asian Development Bank is committed to work- China’s development have been focused on ‘absorbing foreign
ing closely and co-financing with the AIIB to address investment’ and the next step will be about the outflow of
the vast infrastructure needs facing Asia by using our Chinese development to its neighbors.” 11
long experience and expertise.
Takehiko Nakao, ADB president 5 Yuan Inclusion in IMF’s SDR
The “New Silk Road”: Background On November 30, 2015, the IMF announced that China’s
currency, the yuan, is to be included in the basket of currencies
(This section “The New Silk Road” is incorporated from our 2015 which make up the IMF’s Special Drawing Right, or SDR. On
White Paper.) October 1st, 2016, the IMF will then add the yuan to its SDR
basket with a weighting of 10.92%, as the currency has “met all
The New Silk Road plan, comprising both a land-based path existing criteria.” The weighting of the other currencies in the
and a maritime route, has been referred to as a Chinese national basket is 41.73% (USD), 30.93% (EUR), 8.33% ( JPY) and
8.09% (GBP). This is the first time in over 15 years that the list
54
