Markets
Visualizing China’s Most Ambitious Megaproject
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Visualizing China’s Most Ambitious Megaproject
View the high resolution version of today’s graphic by clicking here.
Costing between $4-8 trillion and affecting 65 countries, China’s ambitious One Belt, One Road (OBOR) initiative is the granddaddy of all megaprojects.
By the time of it’s estimated completion in 2049, OBOR will stretch from the edge of East Asia all the way to East Africa and Central Europe, and it will impact a lengthy list of countries that account for 62% of the world’s population and 40% of its economic output.
Today’s infographic from Raconteur helps visualize the initiative’s tremendous size, scale, and potential impact on Asian infrastructure.
Silk Road 2.0
The tangible concept behind OBOR is to build an extensive network of infrastructure – including railways, roads, pipelines, and utility grids – that help link China to the rest of Asia, as well as Africa and Europe.
This multi-trillion dollar project will fill the infrastructure gap that currently inhibits economic growth potential on the world’s largest continent, but it has other important objectives as well. By connecting all of these economies together, China is hoping to become the gatekeeper for a new platform international trade cooperation and integration.
But that’s not all: if China’s economic corridor does what it’s supposed to, the countries in it will see more social and cultural links, financial cooperation, and a merger of policy goals and objectives to accomplish.
Naturally, this will expand the clout and influence of China, and it may even create the eventual scaffolding for the renminbi to flourish as a trade currency, and eventually a reserve currency.
One Road or Roadblock?
When billions of dollars are at play, the stakes become higher. Although some countries agree with the OBOR initiative in principle – how it plays out in reality is a different story.
Most of the funding for massive deep-water ports, lengthy railroads, and power plants will be coming from the purse strings of Chinese companies. Some will be grants, but many are taking the form of loans, and when countries default there can be consequences.
In Pakistan, for example, a deep-water port in Gwadar is being funded by loans from Chinese banks to the tune of $16 billion. The only problem? The interest rate is over 13%, and if Pakistan defaults, China could end up taking all sorts of collateral as compensation – from coal mines to oil pipelines.
Meanwhile, Sri Lanka was unable to pay its $8 billion loan for the Hambantota Port. In the middle of 2017, the country gave up the controlling interest in the port to a state-owned company in China in exchange for writing off the debt. China now has a 99-year lease on the asset – quite useful, since it happens to be right in the middle of one of China’s most important shipping lanes to Africa, the Middle East, and Europe.
Natural Opposition
While most economies in Asia are willing to accept some level of risk to develop OBOR, there is one country that is simply not a fan of the megaproject.
India, a very natural rival to China, has a few major qualms:
- The China-Pakistan Economic Corridor (CPEC) goes right through Kashmir, a disputed territory
- Chinese investment in maritime trade routes through the Indian Ocean could displace India’s traditional regional dominance
- India sees the OBOR megaproject as lacking transparency
Meanwhile, with neighboring states such as Sri Lanka and Pakistan getting billions of dollars of investment from Chinese state-run companies, it likely creates one more issue that Indian Prime Minister Modi is not necessarily happy about, either.
Economy
Economic Growth Forecasts for G7 and BRICS Countries in 2024
The IMF has released its economic growth forecasts for 2024. How do the G7 and BRICS countries compare?
G7 & BRICS Real GDP Growth Forecasts for 2024
The International Monetary Fund’s (IMF) has released its real gross domestic product (GDP) growth forecasts for 2024, and while global growth is projected to stay steady at 3.2%, various major nations are seeing declining forecasts.
This chart visualizes the 2024 real GDP growth forecasts using data from the IMF’s 2024 World Economic Outlook for G7 and BRICS member nations along with Saudi Arabia, which is still considering an invitation to join the bloc.
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Mixed Economic Growth Prospects for Major Nations in 2024
Economic growth projections by the IMF for major nations are mixed, with the majority of G7 and BRICS countries forecasted to have slower growth in 2024 compared to 2023.
Only three BRICS-invited or member countries, Saudi Arabia, the UAE, and South Africa, have higher projected real GDP growth rates in 2024 than last year.
Group | Country | Real GDP Growth (2023) | Real GDP Growth (2024P) |
---|---|---|---|
G7 | 🇺🇸 U.S. | 2.5% | 2.7% |
G7 | 🇨🇦 Canada | 1.1% | 1.2% |
G7 | 🇯🇵 Japan | 1.9% | 0.9% |
G7 | 🇫🇷 France | 0.9% | 0.7% |
G7 | 🇮🇹 Italy | 0.9% | 0.7% |
G7 | 🇬🇧 UK | 0.1% | 0.5% |
G7 | 🇩🇪 Germany | -0.3% | 0.2% |
BRICS | 🇮🇳 India | 7.8% | 6.8% |
BRICS | 🇨🇳 China | 5.2% | 4.6% |
BRICS | 🇦🇪 UAE | 3.4% | 3.5% |
BRICS | 🇮🇷 Iran | 4.7% | 3.3% |
BRICS | 🇷🇺 Russia | 3.6% | 3.2% |
BRICS | 🇪🇬 Egypt | 3.8% | 3.0% |
BRICS-invited | 🇸🇦 Saudi Arabia | -0.8% | 2.6% |
BRICS | 🇧🇷 Brazil | 2.9% | 2.2% |
BRICS | 🇿🇦 South Africa | 0.6% | 0.9% |
BRICS | 🇪🇹 Ethiopia | 7.2% | 6.2% |
🌍 World | 3.2% | 3.2% |
China and India are forecasted to maintain relatively high growth rates in 2024 at 4.6% and 6.8% respectively, but compared to the previous year, China is growing 0.6 percentage points slower while India is an entire percentage point slower.
On the other hand, four G7 nations are set to grow faster than last year, which includes Germany making its comeback from its negative real GDP growth of -0.3% in 2023.
Faster Growth for BRICS than G7 Nations
Despite mostly lower growth forecasts in 2024 compared to 2023, BRICS nations still have a significantly higher average growth forecast at 3.6% compared to the G7 average of 1%.
While the G7 countries’ combined GDP is around $15 trillion greater than the BRICS nations, with continued higher growth rates and the potential to add more members, BRICS looks likely to overtake the G7 in economic size within two decades.
BRICS Expansion Stutters Before October 2024 Summit
BRICS’ recent expansion has stuttered slightly, as Argentina’s newly-elected president Javier Milei declined its invitation and Saudi Arabia clarified that the country is still considering its invitation and has not joined BRICS yet.
Even with these initial growing pains, South Africa’s Foreign Minister Naledi Pandor told reporters in February that 34 different countries have submitted applications to join the growing BRICS bloc.
Any changes to the group are likely to be announced leading up to or at the 2024 BRICS summit which takes place October 22-24 in Kazan, Russia.
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