27 JULY 2015
TABLE OF CONTENTS
OVERVIEW: China’s new silk roads – implications for emerging market sovereigns
2
Growth in South, Southeast Asia should rise on infrastructure investment
6
7
Bilateral trade flows should receive a boost, particularly in Central Asia
8
10
11
anushka.shah@moodys.com
thomas.byrne@moodys.com
Eurasian Sovereigns
China's Belt and Road Strategy – Credit Positive for Emerging Markets In March 2015, China’s (Aa3 stable) government unveiled a blueprint to develop a Silk Road
Economic Belt and 21st-Century Maritime Silk Road. Collectively, these new silk routes are
known as China’s “Belt and Road” strategy — or “One Belt, One Road” — and have become a
cornerstone of Beijing’s foreign economic policy.
The new silk roads develop the “Go Global” policy that China officially launched in 2001,
broadening its initial industrial focus into a strategic, regional investment initiative.
In this report, we examine the implications for the more than 40 participating sovereigns,
which span three continents, focusing on the two-thirds that are rated. We believe that the
Belt and Road initiative will provide net benefits. Our conclusions are as follows:
» Growth in South, Southeast Asia should rise on infrastructure investment.
The Belt and Road strategy will likely have a transformational impact on smaller,
infrastructure-deficient countries in this region, by spurring investment and boosting
economic growth potential. Among rated sovereigns, Bangladesh (Ba3 stable), Cambodia
(B2 stable), Pakistan (B3 stable) and Vietnam (B1 stable) are likely to be big beneficiaries.
» Infrastructure financing could put pressure on government balance sheets. The
terms of loans extended by China for infrastructure development in emerging markets
are both concessional and commercial. In either case, projects will raise government debt
burdens and, in the latter case, impose pressures on budgetary expenditure.
» Bilateral trade flows should receive a boost, particularly in Central Asia.
Kazakhstan (Baa2 stable) and Mongolia (B2 negative) are among the rated sovereigns
that will benefit from strengthened trade linkages.
» Belt and Road projects may encounter impediments. Most participating
governments face considerable institutional and political challenges and risks in project
implementation.
MOODY'S INVESTORS SERVICE SOVEREIGN AND SUPRANATIONAL
This publication does not announce a credit rating action. For any credit ratings referenced in this publication, please see the ratings tab on the issuer/entity page on www.moodys.com for the most updated credit rating action information and rating history.
2 27 JULY 2015 EURASIAN SOVEREIGNS: CHINA'S BELT AND ROAD STRATEGY – CREDIT POSITIVE FOR EMERGING MARKETS
OVERVIEW: China’s new silk roads – implications for emerging market sovereigns First proposed by President Xi Jinping during a visit to Kazakhstan in late 2013, the Belt and Road strategy is a wide-sweeping initiative
that seeks to revive the ancient Silk Road. The overland belt and maritime road would integrate China with Central Asia and ultimately
as far as the North and Mediterranean Seas through a contiguous infrastructure network, including road and railway systems, oil and
gas pipelines, power plants, and ports (see Exhibit 1). The two corridors would give Beijing a key role in the integration of Eurasia.
China’s ambitions broaden an industry-focused outward investment policy into a geo-economic strategy. The government officially
adopted a “two-way” investment policy when Vice Premier Wu Bangguo in 2001 encouraged enterprises to “go global” and invest
overseas. Former President Jiang Zemin in his report at the 16th National Congress of the Communist Party of China in November
2002 envisaged that this outward policy would result in a number of globally strong enterprises with brand names.1
The Belt and Road plan, jointly announced by the National Development and Reform Commission, the Ministry of Foreign Affairs
and Ministry of Commerce in March 2015 and authorized by the State Council, highlights that the scope of the initiative will extend
well beyond infrastructure construction to financial and trade integration. New regional institutions, such as the Asian Infrastructure
Investment Bank (AIIB) and Silk Road Fund, will support the development of the Belt and Road.
The initiative signals China's rise as a global economic power. However, unlike the US government’s Marshall Plan for the
reconstruction of war-torn Europe in the late 1940s, it does not seek to influence directly the regional political economy. Rather, core
principals are mutual non-interference in internal affairs and an advancement of common prosperity.
EXHIBIT 1
Source: Moody’s Investors Service
 
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The Belt and Road strategy will have tangible benefits for China itself. It will help counteract the economic slowdown by jump-starting
investment. It will also boost exports and provide the access to commodities necessary for China to sustain strong economic growth.
Moody’s believes that such integration will be net positive for China, aiding the establishment of better regional trade and financial
links, and accelerating the government’s long-term economic reform agenda. This would include renminbi internationalization for trade
and project finance, a subject discussed in a parallel Special Comment on China .
Immense geographical scale implies credit implications will be far-reaching
The precise scope of the countries that the new silk roads will encompass is dynamic, since the initiative is open to external
cooperation. As it covers, but is not limited to, the area of the ancient Silk Road, we estimate that the eventual implementation of both
routes will cover over 50 countries, accounting for 16% of world GDP, and more than half of its population (see Appendix).2
For the purpose of this analysis, we focus primarily on the credit implications of the Belt and Road for those emerging market
sovereigns that fall within Moody’s rated universe and for which projects have been already announced. The Belt does run across more
developed economies, notably in Europe, which will likely benefit from improvements in relations with China, tourism, and an increase
in bilateral trade flows. However, the bigger beneficiaries will be emerging markets across Central and South Asia.
Almost two-thirds of the sovereigns across the Belt and Road are rated by Moody’s. Of these, close to half are sub-investment grade
(see Exhibit 2). Other common threads linking these countries are that they are relatively underdeveloped economies with large
infrastructure gaps, tending to have modest per-capita incomes. Their natural resource wealth has fuelled dynamic growth, and
although the recent collapse in commodity prices clouds the economic outlook for these countries, they exhibit fairly strong growth
potential (see Exhibit 3).
Countries Across New Silk Roads Are Primarily Non-Investment Grade (Number)
Source: Moody’s Investors Service
EXHIBIT 3
Belt and Road Sovereigns Have High Growth Potential (% year on year)  
Source: Moody’s Investors Service
Implementation of the Belt and Road strategy will boost growth, but effects will vary
Given that a lion’s share of countries across the new silk routes are emerging markets with a high growth potential, the net credit
 
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EXHIBIT 4
Rated Belt and Road Sovereigns: Who Will Benefit? Sovereigns with Low Per-Capita Incomes, Current Account Imbalances and Large Infrastructure Gaps Stand to Gain
Government Bond Rating
2010-14
144 Investment/
GDP 2014
Europe ( including Eastern Europe) Belarus Caa1/NEG 18,161 9.5 76 3.5 -6.7 - 35.3 Hungary Ba1/STA 24,942 9.9 137 1.3 4.2 41.0 22.0 Poland A2/STA 25,105 38.0 548 3.1 -1.4 79.0 20.3 Turkey Baa3/NEG 19,610 76.9 800 5.4 -5.8 33.0 19.0 Ukraine Ca/NEG 8,668 42.8 132 -0.2 -4.0 75.0 14.8 Middle East and Africa Kenya B1/STA 3,084 42.9 61 6.1 -9.1 65.0 22.6 Saudi Arabia Aa3/STA 52,183 30.8 752 5.3 14.9 29.0 26.7 Egypt B3/STA 10,877 86.7 286 2.7 -0.8 125.0 14.0 Kuwait Aa2/STA 71,020 4.0 171 3.3 29.6 67.0 16.6 Nigeria Ba3/STA 6,031 173.9 567 6.2 1.6 133.0 15.2 Oman A1/NEG 39,681 4.1 82 4.6 6.5 25.0 28.4 Qatar Aa2/STA 143,427 2.2 210 9.2 25.9 26.0 34.2 United Arab Emirates Aa2/STA 64,479 9.3 402 4.0 9.9 3.0 23.1 Central Asia Russia Ba1/NEG 24,805 143.7 1,861 2.8 3.2 74.0 19.9 Azerbaijan Baa3/STA 17,618 9.4 75 3.2 14.1 47.0 23.9 Kazakhstan Baa2/STA 24,020 17.4 209 6.0 2.2 62.0 25.7 Mongolia B2/NEG 11,882 2.9 12 14.0 -8.2 119.0 32.0 South/South East Asia  Bangladesh Ba3/STA 3,373 158.2 174 6.6 0.8 130.0 29.3 Cambodia B2/STA 3,263 15.3 17 6.9 -9.2 109.0 23.2 India Baa3/POS 5,855 1259.7 2,039 7.2 -1.2 90.0 31.5 Indonesia Baa3/STA 10,641 251.5 889 5.8 -3.0 72.0 33.8 Malaysia A3/POS 24,654 30.3 338 5.8 4.5 20.0 25.2 Pakistan B3/STA 4,736 186.3 243 3.5 -1.2 113.0 14.0 Philippines Baa2/STA 6,962 99.4 285 6.3 4.4 95.0 19.4 Singapore Aaa/STA 82,762 5.5 308 6.4 19.1 5.0 27.6 Sri Lanka B1/STA 10,372 21.0 75 7.5 -2.7 37.0 27.6 Thailand Baa1/STA 14,354 68.7 405 3.8 3.2 76.0 25.6 Vietnam B1/STA 5,635 90.6 186 5.9 4.8 112.0 25.6
Note: Shaded cells denote those countries that will likely benefit from Belt and Road projects, because they fall lower than the average for developing, investment-grade countries in terms of per-capita income, current account balances and investment rates, and higher than the average for five-year GDP growth rates (i.e exhibit economic dynamism).
Sources: Moody’s Investors Service, International Monetary Fund, World Bank 
Many countries that the Belt and Road initiative will cover face pressing infrastructure needs that are an impediment to medium-term
growth (see Exhibit 5). The Asian Development Bank (Aaa stable) pegs Asia’s total infrastructure requirements at more than $8 trillion
over 10 years.3 Sectors facing the greatest shortfalls include electricity generation and road transport (see Exhibit 6). While constraints
are well-recognized, limited fiscal space and difficulties in mobilizing financial resources for infrastructure investment have acted as
impediments. For these emerging economies, the impetus for investment that will come with the Belt and Road initiative will provide a
meaningful thrust to growth.
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EXHIBIT 5
Many Countries Across the New Silk Roads Have Weak Infrastructure (Infrastructure rank of 144 countries)
Source: World Economic Forum Global Competitiveness Report, 2014-15
EXHIBIT 6
Asia’s Infrastructure Gap is Large, Especially for Energy and Transport (Estimated needs by sector, 2010-2020, $ billion)
Source: Asian Development Bank 
Other economies have an infrastructure framework in place, but one that is obsolete and in need of upgrading. Such economies will
likely witness only marginal benefits in terms of an investment uplift. However, many of these countries, notably those in Central Asia
and the Middle East, have large natural resources. The construction of the routes should improve accessibility to these resources, aiding
an increase in trade and business competitiveness.
Apart from these gains, for all countries along the Belt and Road, the initiative will serve to increase consumption over time as regions
become integrated and form a large market for China’s exports. This will be particularly so as they move up the income chain from
current low levels (Exhibits 7 and 8).
EXHIBIT 7
Source: World Bank Development Indicators
EXHIBIT 8
A Growing Middle Class Suggests Strong Potential for Growth (Middle-class population in millions, global share)
2009 2020 2030
Number % Number % Number % North America 338 18% 333 10% 322 7% Europe 664 36% 703 22% 680 14% Central & South America 181 10% 251 8% 313 6% Asia Pacific 525 28% 1,740 54% 3,228 66% Sub-Saharan Africa 32 2% 57 2% 107 2% Middle East & North Africa 105 6% 165 5% 234 5% World 1,845 100% 3,249 100% 4,884 100%
Source: Organisation for Economic Co-operation and Development
 
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Growth in South, Southeast Asia should rise on infrastructure investment For relatively small, infrastructure-impoverished countries in South and Southeast Asia, the new routes will likely have a transformative
economic impact, spurring investment and therefore a rise in national income.
In South Asia, investments focus primarily on Pakistan
» In Pakistan, construction of the China-Pakistan Economic Corridor will connect the port of Gwadar in the south of the country
with Kashgar in China’s northwestern Xinjiang region. It will serve as a 3,000-kilometer transport link, and involve the development
of special economic zones and coal, wind, solar and hydro energy projects. In April 2015, President Xi pledged investments worth
$46 billion towards corridor projects in the country, which represents 18% of GDP or 28 times the FDI that Pakistan received in the
fiscal year ended June 2014. A majority of the investment will go to ramping up Pakistan’s energy capacity, shortfalls in which have
kept growth anemic. Development of roads and railways is also a priority.
» Bangladesh is an integral part of a transport corridor to link China with India and Myanmar – the so-called Bangladesh-China-
India-Myanmar Economic Corridor (BCIM Corridor). Other projects connected with the Belt and Road in Bangladesh include a coal
plant, a deep sea port and a bridge.
» Although the BCIM Corridor will run through India (Baa3 positive), no large Belt and Road projects have yet been announced there.
Even if China does not fund large projects in the country, India is likely to benefit from economic opportunities offered by the
integration of East and South Asian supply chains.
» Sri Lanka (B1 stable) has already benefited considerably from large-scale investment following the end of the civil war in 2009.
Between 2010 and 2014, Chinese investment backed the development of the Hambantota Port, the Colombo Transshipment Port,
an expressway, a coal power plant, and an airport, among other infrastructure projects. We regard these completed projects, which
have served to boost investment and headline growth in the country, as part of the new silk roads.
The Greater Mekong sub-region is also a key focus area
Projects have also been announced across Southeast Asia, particularly in the ‘Greater Mekong' sub-region, where China has historically
been a large investor. While the quantum of investment involved is less clear, the countries' small economic size suggests that they will
be relative beneficiaries.
» Over the last decade, Chinese FDI into Laos (unrated) has contributed to rapid growth, particularly in the hydropower and mining
sectors. In 2010, the two countries agreed to construct a 420km rail link connecting Kunming in China's southwestern Yunnan
province with Vientiane. Although plans have stalled due to the sharp increase in the country’s debt burden that will result from
the $7.2 billion project, implementation would mark a remarkable advance for Laos’ rail network, which at present is only 3.5km
long.
» Work on the Myanmar (unrated) section of the BCIM Corridor has been underway for a while. Early this year, an oil and gas
pipeline connecting the country with China, built by China National Petroleum Corporation (A3 stable) and Myanmar Oil and Gas
Enterprise (unrated), began trial operations. And in 2014, China Unicom (unrated), a state-owned telecoms company, completed
an optical cable between Yunnan and Myanmar. An expressway connecting Yunnan with Ruili in western Myanmar is also under
construction.
» Last year, Thailand’s (Baa1 stable) ruling junta approved plans for a transport infrastructure project which included the building
of two rail links with China. Another railway line connecting southern Yunnan to the border with Vietnam is already operational.
Together, the rail links with Laos, Myanmar, Thailand and Vietnam will form part of the North-South Economic Corridor, linking
Kunming with Bangkok.
Other countries outside the region that are likely to benefit from Chinese investment in transport infrastructure include Kenya (B1
 
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been signed in the energy and transportation sectors. However, China’s contribution towards building infrastructure in Africa has been
long-standing.
Impact on investment is not large, but will increase
A rise in public investment in emerging markets is typically associated with higher output. The International Monetary Fund (IMF)4
finds that growth in public investment in emerging economies has flattened (see Exhibit 9). It calculates that large and sustained
increases in government expenditure in emerging and developing economies result in output rising 8% in the fifth year after the
spending boom, compared with the year before it. Given their low investment rates as a percentage of GDP, we recognize that many
economies across South and Southeast Asia would likely have experienced some increase in investment even in the absence of Belt and
Road projects, and are thus unlikely to see an additional rise in output to this degree.
Because the size of the projects relative to GDP varies across countries, some will benefit more than others. For example, investments
are of a larger order of magnitude in Pakistan (18% of GDP), Laos (62% of GDP), potentially Bangladesh and Myanmar, and some
Central Asian or Eastern European countries.
Looking at some emerging economies in Asia5 as an example, we calculate that, based on past trends, investment growth would have
averaged around 8% year on year from 2015 to 2019. However, assuming Belt and Road projects take off as envisaged, growth in
investment will likely be over 9% (see Exhibit 10). This gap widens over time, and will help sustain headline GDP growth rates.
EXHIBIT 9
Public Investment in Emerging Economies Has Plateaued (In real terms; %, year on year)
Sources: International Monetary Fund, Moody’s Investors Service
EXHIBIT 10
Chinese Investment Could Help Prop up Capital Formation in Asia; Effects Will Be Gradual (%, year on year)
Source: Moody’s Investors Service
Infrastructure financing could put pressure on government balance sheets China’s options to fund the Belt and Road projects are diverse. Typically, funding for most Chinese projects so far has come from loans
extended by the China Development Bank Corporation (Aa3 stable) and the Export-Import Bank of China (Aa3 stable). However, there
are now several alternative choices.
Fifty countries have signed the Articles of Agreement for the China-led AIIB. Including seven more prospective members, total founding
members may number 57 by the end of this year. Of these, 31 countries fall along the Belt and Road, indicating that lending from the
AIIB will be well-aligned with China’s strategic initiatives (see Exhibit 11). The AIIB will have an initial authorized capital stock of $100
billion.
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Other funding options include: the $40 billion Silk Road Infrastructure Fund set up by China last year, the chief mandate of which is to
invest in Belt and Road projects; the New Development Bank established by Brazil (Baa2 negative), China, India, Russia (Ba1 negative)
and South Africa (Baa2 stable) – the so-called BRICS – with $100 billion of initial authorized capital; and multicurrency bonds, such as
those recently issued by the Bank of China (A1 stable).
The terms of the loans for infrastructure development will vary according to the financing capacity of the recipient sovereign, with
some on a concessional basis and others on commercial terms. In many countries, the government will partly finance projects, or
funding will be raised in the markets, increasing fiscal risks. This could become a stumbling block for implementation, a topic we discuss
later in this report. A case in point would be the construction of the railway line in Laos, which is due to rely primarily on government
funding. This would likely result in a ratcheting up of the debt burden – a key reason behind why it has stalled.
Given the range of financing methods, the initiative will have varied effects on public debt. In the short term, spending related to
infrastructure projects will boost domestic demand, as discussed. The IMF finds that in those emerging markets countries where
the level of economic slack and efficiency associated with public investment projects is relatively low, an increase in infrastructure
development would come at the cost of higher public-debt-to-GDP ratios.6 In commodity-exporting economies, where an increase in
public investment coincides with natural resource windfalls that boost public revenues, the impact on debt could be smaller.
EXHIBIT 11
A Majority of AIIB Prospective Founding Members Lie Across the New Silk Roads
Source: Moody’s Investors Service
EXHIBIT 12
Belt and Road Sovereigns Don't Have High Debts, But Are Dependent on Foreign Finance (%)
Source: Moody's Investors Service
We find that most Belt and Road sovereigns have relatively low government debt levels compared to the median for rated sovereigns
across other regions, but their dependence on foreign currency borrowing is high (see Exhibit 12). Nonetheless, if the increase in the
debt burden outweighs output gains, the net credit implication would be negative. This would act as a particular rating constraint for
those emerging markets in South and Central Asia that already have weak fiscal and debt metrics.
Bilateral trade flows should receive a boost, particularly in Central Asia By integrating diverse markets, the new silk route projects will facilitate trade within the region. At the Boao Forum in Hainan, China,
in March 2015, President Xi said he expected that annual trade with countries along the Belt and Road would surpass $2.5 trillion in a
decade.
In gauging the credit implications, it is important to net out investment-related imports associated with the ramp-up of infrastructure,
before payoffs are realized in the form of higher export growth, particularly those linked with mining and energy projects. In the interim
period of adjustment, how governments manage the monetary and fiscal implications of large foreign inflows will have an important
bearing on the credit profile.
 
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In Southeast Asia, the initiative ties in with the Master Plan for ASEAN7 Connectivity, which seeks to integrate the region through
enhanced physical infrastructure development, effective institutions and people-to-people exchange. China has been ASEAN’s largest
trading partner since 2011, and its share in ASEAN trade rose to 14.5% in 2014 from 9.2% in 2005.
Construction of natural gas pipeline will make Central Asian sovereigns a key beneficiary
Central Asian sovereigns in particular should see a boost to trade flows. In this region, the routes will run through some of China’s
largest trading partners for its natural gas resources (see Exhibit 13). Chinese investments in Central Asia are primarily centered around
the construction of a natural gas pipeline that will run from Turkmenistan (unrated) to Xinjiang in northwestern China, through
Uzbekistan (unrated) and Kazakhstan. The pipeline comprises three parallel lines, each running for over 1,800km. Upon completion
of the third line by the end of 2015, the overall delivery capacity of the Central Asia-China Gas Pipeline will account for 20% of China’s
annual natural gas consumption, according to CNPC. Construction of a fourth line, which will also originate in Turkmenistan but run
through Tajikistan (unrated) and Kyrgyz Republic (unrated), began in 2014. Once fully operational, the Central Asia-China Gas
Pipeline will have an annual deliverability of 85 billion cubic meters, making it the largest gas transmission system in Central Asia.
Taken as a whole, Chinese investments in Central Asia focus on improving the region’s infrastructure capabilities and ensuring energy
security. For instance, the Baku-Tbilisi-Kars railway through Azerbaijan (Baa3 stable), funded by local sources, will act as the final link
in an overland transport route connecting China to Georgia (Ba3 positive) and Turkey (Baa3 negative), bypassing Russian territory.
The Kars-Edirne link, in Turkey, is funded by China. These railway lines should boost total trade volumes between China and the three
countries.
One risk is that the ongoing moderation in China's import demand will hurt non-energy commodity exporters along the Belt and Road.
However, China's demand for cleaner energy sources such as natural gas should remain robust as it shifts away from coal. Even if an
overall moderation in import demand were to occur, we view new silk road projects as being supportive for investment and growth
for most sovereigns in Central Asia, since they will address supply-side bottlenecks and boost domestic demand. However, for those
countries that have a very large trade exposure to China, such as Turkmenistan, infrastructure investment associated with Belt and
Road projects alone will not be sufficient to offset the deceleration in export growth.
In North Asia, China’s relations with Mongolia (B2 negative), which have historically been contentious, have improved over recent
 years. China absorbs nearly 90% of Mongolia’s exports, primarily coal, copper and iron ore. The Chinese state-owned mining group
Shenhua (unrated) is part of a consortium of companies which will help build a railroad linking Tavan Tolgoi, Mongolia’s largest coal
mine, to the border with China.
EXHIBIT 13
China’s Imports its Gas Primarily from Belt and Road Countries in Central Asia (% of total gas imports)
* Pipelines. Source: BP Statistical Review of World Energy 
EXHIBIT 14
Central Asian Sovereigns Have Witnessed a Sharp Rise in Bilateral Trade with China (% of GDP)
Source: China Stat
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Although the routes will pass through the Middle East, we expect increases in trade here to be limited, given the developed relationship
that China already enjoys with these countries. In 2014, the Middle East supplied China with 52% of its total crude oil imports, with
Saudi Arabia (Aa3 stable) accounting for 16% of the total. Other energy-supplying countries in the Middle East through which the Belt
and Road will run include Iran (unrated), Iraq (unrated), Kuwait (Aa2 stable), Oman (A1 negative), Qatar (Aa2 stable) and the United
Arab Emirates (Aa2 stable).8
Helped in large part by the opening of the gas pipeline network, China is rapidly becoming the leading trade partner for all the Central
Asian states (see Exhibit 14). These shares should only increase with the development of shorter, alternative energy routes.
An immediate implication of the implementation of large-scale investment projects would be to bolster these sovereigns' external
positions through an increase in foreign direct investment and loans. However, this benefit will be offset to the extent to which such
investment finances project-related imports of goods and labor.
Belt and Road projects may encounter impediments As an ambitious strategy that seeks to integrate Eurasia, constructing the Belt and Road will be a challenging exercise in diplomatic
coordination. In addition to serving as a transport network, the initiative will expand China’s sphere of geo-economic influence. Its
success, to a large extent, will depend on cooperation from the political leadership in host countries, and their ability to accept greater
Chinese involvement in the infrastructure-building process.
In many countries, domestic political sensitivities could prove to be a stumbling block. In Sri Lanka, for example, a new government
suspended the China-backed Colombo Port City project. In the Middle East, sectarian strife poses political and project risks. In
Baluchistan, Pakistan, where the CPEC is charted to begin, there is an ongoing separatist insurgency.
In Southeast Asia, if territorial disputes in the South China Sea were to intensify, this could raise domestic opposition to projects. For
example, there are no Belt and Road plans in the Philippines (Baa2 stable), and the rail line project in Vietnam has stalled. Another
stumbling block could be geopolitical rivalry with larger economies such as India and Russia, through whose backyards the Belt and
Road will run.
Besides this, the financing of infrastructure development will face many impediments, given weak legal and regulatory frameworks in
the countries involved. Projects that rely on market financing will be more dependent on recipient governments establishing a legal
framework that supports enforceability of contracts, effective regulation and an expeditious judiciary process.
A further challenge will be a lack of administrative capacity in the less developed Belt and Road economies. These typically have
weak delivery mechanisms and a relatively inefficient public investment process. In many of these economies, legislation surrounding
environmental and social protection is weak.
All in all, the ramp-up in infrastructure will likely be a gradual process, but the potential benefits of the various projects, and China's
 
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Appendix – Belt and Road sovereigns (including unrated)
Government Bond Per-Capita
GDP Growth Current Account
Balance Infrastructure
Index Investment/
GDP Rating $, 2014 Mns, 2014 $ billion, 2014 %, 2010-14 % GDP, 2014 Ranking %, 2014
Europe ( including Eastern Europe) Belarus Caa1/NEG 18,161 9.5 76.1 3.5 -6.7 - 35.3 Hungary Ba1/STA 24,942 9.9 137.1 1.3 4.2 41.0 22.0 Poland A2/STA 25,105 38.0 548.0 3.1 -1.4 79.0 20.3 Turkey Baa3/NEG 19,610 76.9 799.5 5.4 -5.8 33.0 19.0 Ukraine Ca/NEG 8,668 42.8 131.8 -0.2 -4.0 75.0 14.8 Middle East and Africa Angola Ba2/NEG 7,203 24.4 142.6 5.2 0.8 141.0 14.1 Benin Unrated 822 10.6 8.7 4.5 -8.5 - 18.7 Egypt B3/STA 10,877 86.7 286.4 2.7 -0.8 125.0 14.0 Iran Unrated - - - - - - - Iraq Unrated 14,571 35.9 221.1 6.4 6.9 - 0.0 Kenya B1/STA 3,084 42.9 60.9 6.0 -10.4 65.0 22.6 Kuwait Aa2/STA 71,020 4.0 170.6 3.3 29.6 67.0 16.6 Nigeria Ba3/STA 6,031 173.9 567.0 6.2 1.6 133.0 15.2 Oman A1/NEG 39,681 4.1 81.8 4.6 6.5 25.0 28.4 Qatar Aa2/STA 143,427 2.2 210.1 9.2 25.9 26.0 34.2 Sudan Unrated 1,980 37.3 73.8 5.5 -5.2 - 17.3 Syria Unrated - - - - - - - Tanzania Unrated 1,006 47.7 47.9 6.8 -10.2 117.0 31.3 United Arab Emirates
Aa2/STA 64,479 9.3 401.6 4.0 9.9 3.0 23.1
Saudi Arabia Aa3/STA 52,183 30.8 752.5 5.3 10.2 72.0 26.7 Central Asia Russia Ba1/NEG 24,805 143.7 1860.6 2.8 3.2 74.0 19.9 Afghanistan Unrated 649 31.3 20.3 6.8 -5.2 - 20.4 Azerbaijan Baa3/STA 17,618 9.4 75.2 3.2 14.1 47.0 23.9 Kazakhstan Baa2/STA 24,020 17.4 208.6 6.0 2.2 62.0 25.7 Kyrgyzstan Unrated 3,361 5.7 7.4 3.7 -13.7 - 27.0 Mongolia B2/NEG 11,882 2.9 12.0 14.0 -8.2 119.0 32.0 Tajikistan Unrated 2,688 8.3 9.2 7.1 -3.6 107.0 14.4 Turkmenistan Unrated 8,721 5.8 47.9 11.1 -5.9 - - Uzbekistan Unrated 5,609 30.6 62.6 8.2 0.1 - 30.8 South/South East Asia Bangladesh Ba3/STA 3,373 158.2 173.8 6.6 0.8 130.0 29.3 Brunei Unrated 37 0.4 15.1 0.9 23.6 - 15.5 Cambodia B2/STA 3,263 15.3 16.7 6.9 -9.2 109.0 23.2 India Baa3/POS 5,855 1259.7 2039.2 7.2 -1.2 90.0 31.5 Indonesia Baa3/STA 10,641 251.5 888.5 5.8 -3.0 72.0 33.8 Laos Unrated 4,987 6.9 11.8 8.0 -25.1 - Malaysia A3/POS 24,654 30.3 338.1 5.8 4.5 20.0 25.2 Maldives Unrated 8,342 0.3 2.9 4.9 -8.4 - 20.0 Myanmar Unrated 1,221 51.4 62.8 6.9 -7.2 138.0 25.7 Nepal Unrated 699 28.1 19.6 4.5 4.6 126.0 28.9 Pakistan B3/STA 4,736 186.3 243.4 3.5 -1.2 113.0 14.0 Philippines Baa2/STA 6,962 99.4 284.6 6.3 4.4 95.0 19.4 Singapore Aaa/STA 82,762 5.5 307.9 6.4 19.1 5.0 27.6 Sri Lanka B1/STA 10,372 21.0 74.9 7.5 -2.7 37.0 27.6 Thailand Baa1/STA 14,354 68.7 404.8 3.8 3.2 76.0 25.6 Vietnam B1/STA 5,635 90.6 186.2 5.9 4.8 112.0 25.6
 
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12 27 JULY 2015 EURASIAN SOVEREIGNS: CHINA'S BELT AND ROAD STRATEGY – CREDIT POSITIVE FOR EMERGING MARKETS
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MOODY'S INVESTORS SERVICE SOVEREIGN AND SUPRANATIONAL
13 27 JULY 2015 EURASIAN SOVEREIGNS: CHINA'S BELT AND ROAD STRATEGY – CREDIT POSITIVE FOR EMERGING MARKETS
Endnotes 1 See Full Text of Jiang Zemin's Report at 16th Party Congress
2 Estimates in newswires suggest that the network could be larger, spanning across as many as 65 countries.
3 See Financing Infrastructure for Connectivity: Policy Implications for Asia  , June 2011, ADB Institute; p7
4 IMF Oct 2014 World Economic Outlook, Chapter 3
5 Calculations are based on nominal gross fixed capital formation for Pakistan, Bangladesh, Cambodia, Thailand, Vietnam and Myanmar. We exclude Laos for lack of data. Averages are weighted according to nominal GDP.
6 See endnote 4
7 ASEAN, the Association of South East Asian Nations, includes Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.
8 Source, EIA
MOODY'S INVESTORS SERVICE SOVEREIGN AND SUPRANATIONAL
14 27 JULY 2015 EURASIAN SOVEREIGNS: CHINA'S BELT AND ROAD STRATEGY – CREDIT POSITIVE FOR EMERGING MARKETS
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AUTHOR Anushka Shah