BEIJING (Reuters, AFP) - Chinese President Xi Jinping pledged $124 billion (S$174 billion) on Sunday (May 14) for his ambitious new Silk Road plan to forge a path of peace, inclusiveness and free trade, and called for the abandonment of old models based on rivalry and diplomatic power games.

China has touted what it formally calls the Belt and Road initiative as a new way to boost global development since Xi unveiled the plan in 2013, aiming to expand links between Asia, Africa, Europe and beyond underpinned by billions of dollars in infrastructure investment.

The initiative spans some 65 countries representing 60 per cent of the world population and around a third of global gross domestic product. The China Development Bank has earmarked US$890 billion for some 900 projects.

China's most important diplomatic event of the year, the two-day summit offers Xi another chance to bolster China's global leadership ambitions as US President Donald Trump promotes "America First" and questions existing global free trade initiatives like Nafta.

"We should build an open platform of cooperation and uphold and grow an open world economy," Xi told the opening of the summit. Xi said the world must create conditions that promote open development and encourage the building of systems of "fair, reasonable and transparent global trade and investment rules".

"Trade is the important engine of economic development," Xi said.

He said the world must promote the multilateral trade system, the establishment of free trade regions, and the facilitation of free trade.

Massive funding boost

Xi pledged a massive funding boost to the new Silk Road, including an extra 100 billion yuan ($14.50 billion) into the existing Silk Road Fund, 380 billion in loans from two policy banks and 60 billion yuan in aid to developing countries and international institutions in new Silk Road countries.

In addition, Xi said China would encourage financial institutions to expand their overseas yuan fund businesses to the tune of 300 billion yuan.

Xi did not give a timeframe for the new loans, aid and funding pledged on Sunday.

Leaders from 29 countries are attending the forum, which ends on Monday. China formally calls the scheme in English the Belt and Road initiative.

Some Western diplomats have expressed unease about both the summit and the plan as a whole, seeing it as an attempt to promote Chinese influence globally.

China has rejected criticism of the plan and the summit, saying the scheme is open to all, is a win-win and aimed only at promoting prosperity.

"What we hope to create is a big family of harmonious co-existence," Xi said, adding pursuit of the initiative will not resort to outdated geopolitical manoeuvring. "What we hope to achieve is a new model of win-win cooperation."

Some of China's most reliable allies and partners will attend the forum, including Russian President Vladimir Putin, Pakistani Prime Minister Nawaz Sharif, Cambodian Prime Minister Hun Sen and Kazakh President Nursultan Nazarbayev.

There are also several European leaders attending, including the prime ministers of Spain, Italy, Greece and Hungary.

Singapore is represented by Minister for National Development Lawrence Wong.

In his address on Sunday, Xi noted that China is already engaged in the construction of several major projects as part of its Obor initiative, including the Jakarta-Bandung high-speed railway, China-Laos railway, Addis Ababa-Djibouti railway and Hungary-Serbia railway, and the Gwadar and Piraeus ports, reported state news agency Xinhua.

A multi-dimensional infrastructure network is taking shape, he added underpinned by economic corridors such as China-Pakistan Economic Corridor, China-Mongolia-Russia Economic Corridor and the New Eurasian Continental Bridge.

The network features land-sea-air transportation routes and information expressway and is supported by major railway, port and pipeline projects, Xi said.

North Korean missile test

A North Korean missile test earlier on Sunday threatened to overshadow the summit, however. US and South Korean military officials confirmed that Pyongyang had launched a missile, whose characteristics were not immediately known.

Xi did not address the North Korean missile launch at the start of the summit, but Beijing has warned its communist ally in recent months to avoid any new missile or nuclear tests.

North Korea relies heavily on trade with China for its economic survival, and US President Donald Trump has urged Xi to use that leverage to put pressure on Pyongyang.

Sunday's missile launch "is absolutely an embarrassment to Beijing but it also shouldn't be overstated", Christopher Balding, economics professor at Peking University, told AFP. "This will not overshadow (the summit) in an enormous way but it will absolutely continue to raise US frustrations with Beijing," he said.

Balding said the US was "frustrated" that North Korea was also invited to the summit.

Respecting sovereignty

Xi focused his speech on his initiative, boasting that it represented a "road for peace" and a way to "forge partnerships of friendship rather than alliance". But he cautioned "all countries should respect each others' sovereignty... and territorial integrity".

Xi has defended globalisation at a time when Trump has vowed to put "America First" when it comes to international trade and relations.

Europe, meanwhile, is mired in Britain's looming EU exit. While the prime ministers of Spain, Greece and Italy accepted the summit invitation, German, British and French leaders stayed home.

Xi warned that "isolation results in backwardness".

Belt and Road is seen as a practical solution to relieve China's industrial overcapacity. But it could also serve Beijing's geopolitical ambitions.

"In my view, Belt and Road is intended to create greater economic interdependence between China and its neighbours, which Beijing hopes will translate into increased political influence," said Bonnie Glaser, director of the China Power Project at the Washington-based Center for Strategic and International Studies.

"Xi Jinping wants China to become the dominant regional power in an essentially Sino-centric order," Glaser told AFP.

Indian concerns

Some Belt and Road projects are raising concerns in certain countries. India has voiced displeasure at the China-Pakistan Economic Corridor, a Belt and Road project aimed at linking north-western China to the Arabian Sea. The route cuts through Gilgit and Baltistan in Pakistan-administered Kashmir, disputed territory that India claims is illegally occupied.

Human Rights Watch raised concerns on Saturday about the treatment of people along the new Silk Road route in Central Asian nations with poor track records in infrastructure projects.

The US-based organisation said Chinese authorities have "heightened surveillance and repression to prevent potential unrest that could impede" Belt and Road plans in the western Xinjiang region.