China will draw on its massive foreign exchange reserves to inject $62bn of capital into state-owned “policy banks” in support of its ambitious “New Silk Road” plans to build infrastructure links to foreign markets.
Beijing’s “One Belt, One Road” strategy includes plans to build roads, railways, ports, natural gas pipelines and other infrastructure stretching into south and Southeast Asia, the Middle East, and throough Central Asia to Europe to create demand for China’s industrial exports in the face of overcapacity at home.
The recapitalisation plan revealed on Monday shows China’s leaders are prepared to mobilise the country’s considerable financial resources to put the scheme into action and extend Chinese sway across Asia. It is likely to deepen unease in US business and foreign policy circles about diminishing US influence.
The details emerged as President Xi Jinping began a visit to Pakistan bearing promises of more than $45bn in infrastructure investment.