China’s One Belt One could be many trillions in investment in the 2020s

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brian wang

China’s ambitious One Belt, One Road (OBOR) initiative is likely to have “modest” short-term impact on total investment and overall economic growth in the vast region, says Oxford Economics.

Launched by President Xi Jinping in 2013, OBOR aims to create an infrastructure network by building roads, ports and railway tracks along ancient trading routes that will span 65 countries and connect some 60% of the global population.

“While it’s hard to quantify the total number of projects and amount of financing, the China Development Bank alone has reserved US$890 billion (S$1.24 trillion) for over 900 projects, highlighting the magnitude of this undertaking,” says Oxford Economics’ He Tianjie and Louis Kuijs in a research briefing on April 27.

The Asian Development Bank (ADB) estimates that OBOR would need an annual infrastructural investment of US$1.7 trillion until 2030.

Excess capacity in China’s steel industry ranges from 250 to 450 million tonnes per year, while the economists estimate that total annual OBOR spending would only generate around 22 million tonnes of annual steel demand at current prices.

China Telecom Global has its sights set on expanding its data centre business across the ‘One Belt, One Road’ region, after signing an agreement with UK data centre owner Global Switch and Chinese data centre operator Daily Tech.

The initiative is aimed at building roads, power plants and other infrastructure projects to promote trade and transportation, with funding needs expected to reach US$8 trillion through to 2020.