It’s being called the ‘Project of the Century’ that will bring a new ‘golden age’ of globalisation. The ambitious plan is to link China to the world via the ancient trade routes. The ‘Belt and Road initiative’ is designed to recreate the old trading routes both at sea and overland with huge investment in infrastructure along the route. The numbers are mind boggling; the USD900bln plan will take in 65 countries, connecting over 60% of the world’s population as well as over 30% of global GDP. To put the size of the programme in perspective, it’s 11 times larger than the US’s Marshall Plan, the American initiative to rebuild Western European economies after the end of the Second World War. The overland route will snake through Asia into the Middle East then on to Turkey. From there it will head north to Moscow before continuing on into Europe.
Yesterday Chinese President Xi Jinping hosted over 25 heads of state, including Russian President Vladimir Putin, as well as the heads of the IMF, the UN and the World Bank at the start of a 2 day summit focusing on the initiative. In a clear reference to US President Trump’s more protectionists policies, Xi told the summit ‘We need to improve policy coordination and reject beggar-thy-neighbour practices’ adding ‘This is an important lesson that can be drawn from the global financial crisis and is still very relevant to the development of the world economy today’. He went on to say ‘We need to seek win-win results through greater openness and cooperation, avoid fragmentation, refrain from setting inhibitive thresholds for cooperation or pursuing exclusive arrangements and reject protectionism. In a world of growing interdependency and challenges, no country can tackle the challenges, also the world's problems, on its own’.
However, not all are overly happy about the proposed plan. The initiative in part is being seen as China’s answer to the now defunct Trans-Pacific Partnership (TPP), with some governments, especially in the west, seeing the plan as an attempt to stimulate China’s influence on a more global scale rather than just in Asia. Indeed, both German chancellor Angela Merkel and Donald Trump turned down offers to attend, with Italian Prime Minister Paolo Gentiloni the only G7 leader in attendance. India, along with Japan will not be involved in the project. India’s opposition comes from the belief that no country could accept a plan that ignores its core concerns on sovereignty and territorial integrity, adding that the project is little more than a ‘colonial enterprise, leaving debt and broken communities in its wake’.
Also this morning it was announced that the world’s top oil producers had agreed to extend the cuts in production until March of next year. Russia and Saudi Arabia issued a joint statement pledging to do ‘whatever it takes’ to reduce inventories back to their 5 year average. The announcement comes 10 days before OPEC’s next official meeting and is seen as a warning that other producers will be expected to fall in line with their own cuts in production.