China's immediate neighbors can thus benefit principally from the "Belt" part of the strategy. The "Maritime Silk Road" concepts can spread benefits further afield. Improving and streamlining access to the Indian Ocean is an important part of this program, reducing dependence on the potential bottleneck of the Straits of Malacca. By means of road and rail links, China will also gain direct access to the Arabian Sea, providing new connections to the Horn of Africa as well as to Europe. There is also an option, thanks to rising global temperatures and melting ice, to open up shipping routes to the north as well as to the south of the Eurasian landmass.

President Xi Jinping has estimates that the "Belt and Road" initiatives could bring annual trade volumes between China and the other participating countries to at least US$2.5 trillion in the next decade. It can also assist regional security by alleviating political disputes between countries in the region by establishing a firm economic interdependency to concentrate minds on dispute resolution.

And the fact that China is providing the lion's share of the finance fits well with the agenda of working towards renminbi internationalization and capital account convertibility. Wider use of the Chinese currency will benefit partner countries by enabling them to reduce their currency exchange risks.

In Hong Kong, China already has a ready-made entrepot for handling regional finance, though other trading centers will no doubt be developed. But Hong Kong holds the largest renminbi liquidity pool outside the mainland itself, and already handles huge quantities of renminbi trade: RMB 6.3 trillion (roughly US$1 trillion) in 2014. Hong Kong is also a major center for issuing of the RMB bonds, which will be an important part of the financial structure of individual Belt-Road projects. In this way, if the Chinese initiative comprising the AIIB and the "Belt and Road" initiatives achieves even half of what it sets out to do, it will surely transform the physical and financial infrastructure of the entire continent of Asia and far beyond.

The writer is a columnist with China.org.cn. For more information please visit: http://www.ccgp-fushun.com/opinion/timcollard.htm

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