Standard Chartered Group Chairman Wei Haosi: "One Belt Along The Way" Debt Sustainability Is A Challenge, But More Should Be "Difficult To Get Up" To Strengthen Governance.

In from April 25th to 27th, the second "one belt and one way" International Cooperation Summit (hereinafter referred to as the "Summit Forum") was held in Beijing. In April 25th, Wei Haosi, chairman of Standard Chartered group, attended the "one belt and one road" entrepreneur conference and delivered a speech. He said at the meeting that looking forward to the future, the construction of "one belt and one road" should emphasize the quality of the project, and the private sector should play a fundamental role in promoting more multilateral platforms to participate in the construction process.

In addition to attending the summit forum, Wei Haosi visited many regulatory agencies and financial institutions to seek further cooperation under the "one belt and one road" initiative. The reporter learned that in April 24th and 25th, Standard Chartered signed the related cooperation agreement with China Export and Credit Insurance Corp and China Import and Export Bank under the framework of "one belt and one road".

In April 26th, Wei Haosi received media interviews in Beijing, including the twenty-first Century economic report reporters. He analyzed the Standard Chartered participation in the "one belt and one road" cooperation, prevention and control of project risks, and encouragement of private capital participation. He said in the interview that there are 45 "all along the way" countries in Standard Chartered Bank's global branches. Chartered has entered many countries for more than one hundred years, and has a deep understanding of local market and enterprise economy.

"In 2018, Standard Chartered supported about one hundred" one belt and one way "related projects with a total value of US $twenty billion. This shows our commitment and support for the "one belt and one way" initiative. Standard Chartered is also one of the first international financial institutions to take the "belt and road initiative" as a strategic focus of the group. These achievements also indicate that Standard Chartered not only made promises in language, but also implemented very specific actions. He said.

Deep ploughing along the market

Twenty-first Century: how do you evaluate the achievements of "one belt and one road" over the past five years? What is the participation of Standard Chartered Bank? Why does Standard Chartered take the "one belt and one road" as the business focus?

Wei Haosi: Overall, in the past 5 to 6 years, the "one belt and one way" initiative has made great achievements. From Standard Chartered's participation in the "one belt and one way" project area, half of the Standard Chartered projects are in the field of transport infrastructure, and Standard Chartered has played a very important role in financing water treatment, waste disposal and energy projects. In terms of geographical distribution, our participation in South Asia and Africa is very high. I think the reason why Standard Chartered can contribute is that we have a very long history and extensive business in many markets along the belt. We have an in-depth understanding of local risks in the "one belt and one way" market, which can help us overcome the complexity of these projects. In addition, Standard Chartered Bank and many global and regional multilateral institutions including the world bank and Asia Investment Bank have a very good business relationship, which helps us to participate in the cooperation of the "one belt and one road" related projects, and jointly ensure the feasibility of these projects, so that the risks and returns of these projects can be well balanced.

Twenty-first Century: what is the experience of Standard Chartered in preventing and controlling related project risks?

Wei Haosi: we provide a very systematic approach and mechanism to analyze and solve project risks. Project risks include credit risk, behavior risk, financial crime risk, environmental risk and social risk. In these areas, Standard Chartered has held very high standards for evaluation. In addition, we also cooperate with other financial institutions, such as our cooperation with CITIC insurance to alleviate project risks. We also cooperate with IFC (International Finance Corporation) to provide mixed financing. We believe that the use of these credit slow release tools and means plus effective corporate governance to implement risk management measures can greatly increase project feasibility. Such a mechanism is very helpful for investors. It is also very important for host countries to ensure that the project achieves the expected economic and social returns.

In addition, if a project can pass the feasibility study, the related return should also be able to afford the debt. In the context of the "one belt and one way" initiative, debt sustainability has always been a challenge and controversy, but we should not stop the "one belt and one way" project. Instead, we should strengthen project governance and reduce risks so that the project can become viable and sustainable.

Encourage private capital participation

Twenty-first Century: over the past five years, how did Standard Chartered Bank cooperate with China's policy banks, commercial banks, import and export credit insurance institutions and other financial institutions to participate in the "one belt and one road" project? What is the role of Standard Chartered Bank?

Wei Haosi: in China, we cooperate with different types of financial institutions, including policy banks, commercial banks, CITIC insurance and other institutions. In addition, we are also working with many multilateral financial institutions and development institutions, such as World Bank's international finance company, Asia Investment Bank, new development bank and so on. In Africa, we are also working with local development banks in order to gather these multilateral and regional development institutions and financial institutions together to support the "one belt and one road" related projects. Standard Chartered Bank is headquartered in London, and we have extensive business in Hongkong, Singapore, Shanghai and Shenzhen. In this regard, we can act as a bridge, play a coordinating and referral role, connect these financial centers, and let more capital from the public sector and the private sector participate in the "one belt and one road" related projects.

Twenty-first Century: how to better encourage private capital participation?

Wei Haosi: my suggestion is that we can establish information sharing mechanism and develop information base, so that private sector companies can see potential projects under the "one belt and one way" initiative or the possibility of investment in ongoing projects, and the characteristics and related information of these projects can be released to the private sector, which will greatly increase the attractiveness of the project. Of course, if the project related key risks can be transparent, the effect will be better, but it is more difficult to achieve this. I believe that it is very necessary to rely on some financial institutions who are very aware of the risks of the local market. We are willing to take such a role and introduce more investment to the "one belt and one way" project. In fact, Standard Chartered has done a lot in this respect. We have held many forums and introduced projects to investors.

Make full use of financial technology

Twenty-first Century: Standard Chartered won the Hongkong virtual license last month, and is also working with some financial technology companies in China. How will it use financial technology to support the development of "one belt and one road" in the future? What are the plans?

Wei Haosi: we have collaborated with financial technology companies in many related markets. In December 2017, when I arrived in Shanghai, I signed an agreement and memorandum of understanding on the "one belt and one way" market cooperation with the ant's gold suit. After signing the agreement, I made fruitful results in just over a year. For example, we launched a cross border remittance business on the basis of block chain technology, and helped the Filipinos working in Hongkong to send money back to the motherland. This greatly accelerated the speed and accuracy of remittance and reduced the cost of remittances. This project has been a success. In addition, in the first half of 2018, we launched the first pure e-bank without entity network in Africa. At present, we have corresponding electronic banking schemes in many African countries. In the next few months, we expect to launch E-banks in 4 to 5 African countries, and this network will expand to 9 to 10 countries in the near future. In addition, we also use AI to help us conduct risk analysis, such as financial crime prevention and control.

Twenty-first Century: some analysts believe that China's foreign exchange reserves may be affected in the future, as the trade faces greater adjustment pressure, so that the "one belt and one way" construction will face certain financial challenges. What do you think of this?

Wei Haosi: if we look at the balance of payments in China, the current account surplus is less than in the past, and the possibility of deficit will increase in the long run. But at the same time, with the continuous opening of China's capital market, China's net capital inflow is also increasing. Therefore, my expectation for the future is that with China's further opening to the international capital market, more and more net capital will flow into China, which will offset the reduced current account inflow. Therefore, I do not think there is any indication that China's foreign exchange reserves will drop sharply.