China+64: The Economic Impact of the Belt & Road Initiative on Developing Asia, IHS Markit

Rajiv Biswas, Asia Pacific Chief Economist for IHS Markit

Key Points:

  • China will host ‘The Belt & Road Forum for International Cooperation’ on 14-15 May in Beijing with an estimated 28 heads of state expected to attend, including President Vladimir Putin of Russia, Indonesian President Joko Widodo, Malaysian PM Najib Razak and Philippines President Rodrigo Duterte.
  • With bilateral trade between China and ASEAN having grown from USD 9 billion in 1991 to USD 346 billion in 2015, the Belt & Road Initiative has become a key geopolitical priority for ASEAN countries, with seven of the ten ASEAN heads of state expected to attend the Forum.
  • The scope of China’s One Belt One Road Initiative now extends to 64 other countries, reflecting the strategic scale of China’s economic development vision, which extends across developing Asia, as well as to Africa, the Middle East and Europe. China’s annual trade with the other 64 Belt & Road countries has already exceeded USD 1 trillion.
  • Financing for Belt and Road projects will come from a wide variety of sources within the Chinese financial system, with China Development Bank, China Exim Bank and Bank of China playing important roles. However many other Chinese commercial banks will be involved in project financing.
  • The scale of China’s Belt & Road Initiative could eclipse the role of the G-7 or G-20 Forums as a new framework for stimulating infrastructure development in low income developing countries.



China’s Belt & Road Initiative is a long-term strategic vision that will involve large-scale Chinese and multilateral financing of infrastructure development in many developing countries, notably in the Asian region, but also extending to Africa, the Middle East and Eastern Europe. The scale of infrastructure financing flows under the Belt & Road Initiative is vast, already exceeding USD 1 trillion over the decade ahead.


Multilateral and bilateral financing flows for infrastructure development projects under the Belt & Road Initiative are already underway in many countries, and are expected to gain momentum over the next three to five years as major new projects enter the construction phase.


With an estimated infrastructure financing gap of 5% of GDP for Asian developing countries excluding China, the new infrastructure financing mobilized under the Belt & Road Initiative is expected to play a significant role in helping to boost critical infrastructure development in many low income developing countries in Asia and the rest of the world.


However, a key medium-term risk for China relates to the quality of its loans to Belt & Road nations, and whether some sovereign borrowers may face future difficulties in repaying the large infrastructure financing loans that are being provided. This could pose potential risks of increasing non-performing loans among Chinese banks that have large exposures to infrastructure financing for low income developing countries.