"One Belt And One Road" Has Many Opportunities For Infrastructure Investment. The Finance Ministers Are Eager To Promote.

Editor's note

In April 25th, the second "one belt and one way" International Cooperation summit was opened in Beijing. The two highlights of the first day of the Forum: the first entrepreneurs conference attracted nearly 900 delegates from 88 countries and regions, signed many projects, and 12 sub forum covers all aspects of "one belt and one road", and promoted and publicized a batch of achievements. The scene reporters visited the guests and enterprises to listen to their "one belt and one road" story, and the two cases of economic and trade parks and financial intermediation vividly demonstrated the construction process of "one belt and one road".

I have projects! I have money! I have the ability of professional service.

In April 25th, the second "one belt and one way" International Cooperation Summit Forum was held at the forum, and all sides were actively promoting their resources, which was very enthusiastic to promote the financing of the "along the way". The participants are finance ministers, governors and envoys of different countries and regions, as well as responsible persons of internationally renowned financial institutions and international multilateral organizations.

"One belt and one road" has great opportunities and has been a popular international public product since six years ago. Under the backdrop of the trend of anti globalization, it provides new opportunities for international cooperation and stimulates more possibilities.

With the promotion of "one belt and one road", participants have more common understanding on financing, such as the sustainable development of debt and more use of local currency.

The number of countries that signed the memorandum of cooperation and the platform for inter agency cooperation are increasing. Some concrete and pragmatic work is also being pushed forward. In April 25th, China's Ministry of Finance issued the "one way" debt sustainability analysis framework, to provide participants with an international experience and a voluntary debt management analysis tool to better manage the debt risk and achieve sustainable economic development.

Project and capital docking site

In April 25th, Mauritius's central bank, Changan, said that African countries are very willing to support the "one belt and one way". Africa has huge demographic dividend, abundant resources and huge market potential, which can create economic miracle. The 2063 agenda of Africa is to deploy structural reforms in the next 50 years, to promote smooth trade and financial openness. The "one belt and one way" can further expand trade and economic cooperation between China and Africa.

"China believes that infrastructure construction is a basic job. Russia also proposed the ice silk road initiative near the North Pole. Russia is actively developing the transportation corridor in the north, and we need investment support," said Andrianof, Russia's first deputy prime minister and finance Changan East Silu.

Developed countries and international financial centers are actively promoting their financial services capabilities, including Switzerland, the United Kingdom, China, Hongkong and so on.

For example, Fan Zhilian, a special envoy for financial and professional services in the UK's Ministry of finance, said that the construction of "one belt and one road" needs to develop cooperative projects. It needs to mobilize public and private sectors to participate. It requires risk management and the legal framework and standard system that needs to be integrated with international rules, which requires professionals and services.

Fan Zhilian also pointed out that these are not what a country and an organization can do, and that all parties need to work together to build together.

Financial institutions also expressed strong willingness to participate. Tian Guoli, chairman of China Construction Bank, said: "now is a good time for large-scale infrastructure construction. The cost of capital is very low, sometimes the market cost is lower than the government cost. Through effective product design, we can not only promote large-scale infrastructure construction, but also solve the problem of capital flow. If there are good products, this is a good time. " Tian Guoli also said that "one belt and one road" is not only an opportunity for China, but also a chance for the countries along the route. It is a global opportunity. We must seize the opportunity and need good products.

The head of Standard Chartered Bank also pointed out at the forum that infrastructure construction should actively encourage private sector participation in addition to public funds, because the private sector can play an active role in due diligence and optimization of project portfolios.

In the 6 years that the "one belt and one way" has been pushed forward, the participants have already obtained great practical benefits. The head of the Ministry of finance of Pakistan said, "the promotion of" one belt and one road "initiative has given us great help in the past few years. Pakistan now has the surplus of electric power, and the economic corridor of China Brazil has played an important role in it.

Leveraging private capital participation

Behind the shortage of infrastructure investment funds in underdeveloped areas, there are huge investment opportunities, which allows private capital to fight.

"There are trillions of dollars outside looking for opportunities, but capital is also lacking in courage. Capital wants projects to be safe and worth investing. Can a country that needs investment fund develop tools to ensure the safety of investment funds? Can government departments create a better public environment? In April 25th, representatives of IFF (International Finance Association) asked questions at the scene.

There is a certain mismatch of funds in reality. Jin Liqun, President of the Asian infrastructure investment bank, said that many projects needed money, but there were not enough funds to support it. Those countries and regions with clear standards and high sense of social responsibility will be more likely to get financial support, and governments should devote themselves to building good public products.

In the process of "one belt and one road" initiative, China is actively contributing, in addition to taking the lead in establishing sub investment bank, strengthening cooperation with existing multilateral institutions, promoting capacity building in less developed countries along the way, and improving the financing of projects, such as training officials, giving financial support and so on.

Multilateral development agencies are also actively developing suitable infrastructure projects. For example, the Asian investment bank, which has only a few years to establish, has built up a high standard governance system and maintained close ties with the board of directors to improve the efficiency of investment decision-making. As of now, a total of 39 capital construction projects have been approved. The total investment is close to 8 billion US dollars, covering 15 countries including Indonesia, India and Pakistan.

The countries and regions involved in the route are still trying to mobilize the enthusiasm of private capital. Chen Maobo, the financial secretary of Hongkong, said at the forum that infrastructure construction needs multiple channels and multiple funds. They are considering the proposal of securitisation of loans.

"In addition to public goods construction, there are also commercial considerations. Based on regulatory requirements, banks need to deal with loans to use funds for other projects. From the perspective of investors, the risk of greenbelt investment is higher, but the operation stage of infrastructure projects will bring stable cash flow. Securing loans is a good initiative, especially for green and sustainable projects, "Chen Maobo pointed out.

Russia's first deputy prime minister and finance Changan East West Lu said that the "one belt" initiative suggested strengthening financial cooperation, which would reduce the risk of cross-border capital and increase the safety of projects. As for the next step, "we should get through the financial standards among countries, and the financial accounting of all countries along the border should have a uniform standard".

Is debt risk a problem?

Infrastructure development is one of the experiences of China's economic success. However, the financial capacity, financial maturity and legal system of the countries along the "one belt and one road" are quite different. The debt risk brought by the project has become one of the focus issues of all parties concerned.

"Debt is not a problem in itself. The problem is that we must ensure that we can develop infrastructure through borrowing to limit other public risks," said Kamath, President of the new development bank.

Kamath also pointed out that there are many ways to solve the problem of debt risk, such as choosing the right way of investment, using new technology to improve the quality of infrastructure, making good use of the insurance industry and the existing international system.

Kamath praised China for this. He believed that China set an example for other countries, on the one hand, it promoted the development of infrastructure, and on the other hand, it could not get into debt quagmire.

In a keynote speech, the governor of the people's Bank of China pointed out in his keynote speech that we should objectively and comprehensively understand the debt problem of developing countries. If the increase in debt is accompanied by improvements in infrastructure, improvement of people's livelihood, productivity improvement, poverty reduction, and other indicators conducive to sustained and healthy economic development, it will be conducive to long-term debt sustainability. Investment and financing decisions should not only give full consideration to capital constraints of market players, rationally design financing structure, effectively control risks, but also give full consideration to the overall debt bearing capacity of a country, strengthen the overall coordination of investment and financing, and ensure debt sustainability.

Zhou Xiaochuan, vice chairman of the Boao forum for Asia and former governor of the people's Bank of China, said that in the process of infrastructure construction, we should comply with the market requirements, mainly commercial capital, which can ensure the sustainability of the project and avoid the moral hazard in the process of government investment.

China's Ministry of Finance issued the "belt and road" debt sustainability analysis framework, which fully used IMF and the world bank's low income countries' debt sustainability analysis framework to provide analytical tools for participating countries.

Liu Kun, China's finance minister, said that to achieve the "one belt and one road" development goal, we must integrate the effective acquisition and development financing with maintaining debt sustainability. The Chinese side encourages Chinese financial institutions to jointly build "one belt and one road" state and international institutions to use this tool voluntarily to improve the scientificity and debt management level of investment and financing decisions so as to achieve sustainable and inclusive growth.