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UnionPay travels the Silk Road with Chinese economic policy

The Silk Road 1st Century ADUnionPay International plans to use China’s “Belt and Road Initiative” to bring acceptance of its payments systems to countries along the old Silk Road.

The 2013 Belt and Road Initiative is a project for connectivity and cooperation among countries along China’s ancient trade routes. UnionPay has a presence in “over 50 markets” along the route. It plans to “facilitate the ‘going global’ of China’s financial standards.”

UnionPay points to Kazakhstan as an example. Within 2 years acceptance coverage at ATMs and POS terminals has increased “from 50% and 20% respectively to 80% in both”. It expects the figure to grow to 95% in 2017. More than 1.3 million UnionPay cards have been issued in the country.

Pakistan, another target for the firm, has seen acceptance grow to 70% of ATMs and “almost all” POS terminals. UnionPay has issued 3.4 million cards in Pakistan, giving it the second-largest market share.

UnionPay plans a Russian expansion, too. It aims for 80% acceptance of its cards at all Russian ATMs and POS terminals by the end of 2017.

“Our strategy is to suit our measures to the local conditions in different markets, supporting the personnel exchanges between China and other regions,” says UnionPay International CEO Cai Jianbo.

UnionPay A-OK

Founded in March 2002, UnionPay provides bank card services and a major card scheme in mainland China. It is the only interbank network in China that links all the ATMs of all banks throughout the country.

Last month the firm expanded its influence in Myanmar, part of its global battle with Visa and Mastercard. In 2015 it overtook Visa to become the largest card issuer by value of payments.

The Silk Road Economic Belt

The SREB is the landward phase of the Belt and Road project. The first major expansion in the region was the construction of the New Eurasian Land Bridge, a railway connecting China to Europe through Kazakhstan.

Many of the countries involved in the SREB are already members of the Sian Infrastructure Investment Bank, a multilateral development bank that aims to support the building of infrastructure in the Asia-Pacific region.

Alongside the SREB is the Maritime Silk Road, which aims to fostering growth in Southeast Asia, Oceania, and North Africa.

Chinese General Secretary, Xi Jinping, created a $40 billion development fund to back the Belt and Road scheme in 2014. The Karot Hydropower Station in Pakistan is the first investment project of the Silk Road Fund.

The Belt and Road fund has come under criticism. A report from Fitch Ratings argued that China’s plans were political in nature. The report doubts Chinese banks’ ability to control risks and questions whether the policy is designed to weaken US leadership in Asia.

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