China has been lending billions of dollars to Asian and Pacific countries as part of its Belt and Road Initiative – a massive series of projects designed to revive old land and sea routes linking south-east Asia, Africa, Europe and China to facilitate trade and grow Beijing's strategic influence.

But Dr Shetty delivered a blunt warning to Asia-Pacific nations, saying the BRI initiative was very ambitious, and that some of the infrastructure projects planned would only be promising "as long as there are safeguards in place to ensure that good projects are selected".

Concerns included the amount of debt some nations have signed up to.

"How costly is this money that is coming in to finance these pieces of infrastructure,  and how transparent are the terms under which the borrowings are being undertaken?" he asked.

"Not all transport projects are good, not all connectivity has social rates of return that are positive".

National governments that signed up to BRI should first undertake rigorous cost-benefit analyses.

"Finally, I think there are issues around environmental and social spill-overs from investment projects that would be part of BRI, ensuring that those safeguards are in place as well."

About $300 billion has already been spent on roads, railways and ports in Asia, Europe and Africa as part of the Belt and Road Initiative, and the figure could rise to $US1 trillion ($1.29 trillion).

But already there are questions over the terms of some of the deals that China has struck with other nations. Sri Lanka, for example, was forced to sign over the southern port of Hambantota on a 99-year-lease to two Chinese firms because of a multi-billion dollar debt.

As Fairfax Media revealed this week, China also has designs on building a permanent military base in Vanuatu – a further sign of that nation's desire to spread its economic and military influence through the region.

In a bullish forecast for the region – and with fingers crossed the world avoids a trade war – Dr Shetty said the bank's central forecast is that growth in Asia will slow marginally, from 6.6 per cent last year to 6.3 per cent in 2018.

This is because of China's plans to reduce risky credit growth and marginal investments. Growth in the rest of Asia would broadly continue at current "robust" rates. Indonesia's growth would edge up from 5.1 to 5.3 per cent.

However, if a trade war eventuated between China and the US, rosy projections would be shattered.

Speaking at the release of the Bank's April 2018 economic update, he said: "Developing Asia is the most export-oriented region in the world".

"Other Asian countries are part of the value chains behind China's manufacturing exports, especially in machinery and electrical equipment. In a trade war, their growth prospects would suffer like those of the warriors".

However, he added that "a trade war is not imminent", noting that none of the measures flagged by either the US or China have yet taken effect, and talks are continuing.

The World Bank's forecasts are based on an assumption that the threat will be averted, but Dr Shetty warned other Asian countries to "hope for the best, expect the worst".

"The success of this region is based on free trade, and the creation of value chains which are increasingly centred in China", he said. "(A trade war) would disrupt those value chains and hurt growth prospects in the rest of the region."

Dr Shetty also warned Asian countries – and by implication, Australia – against cutting their business taxes in response to the deep cuts in US company tax rates.

"The right response is not to try to match those reductions [in company tax] to attract more investment", he said emphatically.

"Providing tax holidays and the like is usually an inefficient way of attracting investment, compared to improving the business environment."