While it may be set to shape the future, the Belt and Road Initiative (Belt and Road) is already changing the world today. Mega projects are underway in Asia, Europe and Africa, generating an influx of fixed investment and creating early efficiency gains.
The new financial landscape has generated investment opportunities across asset classes and sectors. Fixed income has emerged as a key channel to date given the unique access and upside opportunities present in Belt and Road-related USD bonds.
China's vision for the Belt and Road Initiative
Belt and Road is a historic undertaking that will enhance cooperation between the Asian, European and African continents. Underpinning the approach are numerous infrastructure projects that stretch across six designated economic corridors to create a network of new and improved connections by land, sea and air.
The vision for Belt and Road was first officially outlined in September 2013 during a speech delivered by President Xi Jinping at Kazakhstan’s newly founded Nazarbayev University. He spoke about increasing the linkages between China and Central Asia, harkening back to the mutual economic development generated by the ancient Silk Road.
Plans have since expanded to include 100 signed cooperation agreements with 86 countries and international organizations1. More recently, Belt and Road was written into the Constitution during the 19th Communist Party of China National Congress meeting in October 2017. This ensures it will remain a long-term priority for government authorities and private enterprises. Belt and Road has already fetched more than US$600 billion from major Chinese institutions and may require US$150-200 billion annually for the foreseeable future2.
1.“China signs cooperation agreements with 86 entities under Belt and Road.” Xinhua 23 December 2017.
2.Source: Bloomberg, Invesco, data as of September 2017.
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