Chinese Policy
China is accelerating its One Road One Belt project by investing US$62 billion in its state-run banks and US$46 billion in Pakistan.
The purpose of the project, which is at the center of China’s future economic policy, is to rebuild the Silk Road connecting Asia, Europe, and Africa. The Asia Infrastructure Investment Bank (AIIB) is going to finance the project, too.
The Chinese government is planning to pour US$32 billion into the China Development Bank and US$30 billion into the Export-Import Bank of China. A similar plan is to be underway for the Agricultural Development Bank of China as well. China’s foreign exchange reserves reached US$3.7 trillion, second to none in the world, as of the end of last year.
According to the Financial Times, the financing plans are to accelerate the One Belt and One Road project. Despite opposition from the United States, the China-led AIIB has attracted 57 founding members, and an increasing number of countries are expected to join it.
Under the circumstances, Chinese President Xi Jinping promised that China would make an infrastructure investment of US$46 billion in Pakistan. The two countries are planning to establish a so-called economic corridor through which the new Silk Roads pass.
A concept mentioned by President Xi Jinping, the economic corridor can be defined as railroad, road and gas pipe networks to be laid in a 3,000 km-long section between the Gwadar Port in Pakistan and the Xinjiang Uygur Autonomous Region. The Gwadar Port is to be developed and owned by China for four decades.
For China, Pakistan is an important strategic partner. The withdrawal of the U.S. troops from Afghanistan has resulted in the instability in the Middle East, which could affect the Xinjiang Uygur Autonomous Region. The Wall Street Journal recently reported that China can keep the U.S. and India in check at the same time when it strengthens its partnership with Pakistan.