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Friday, December 8, 2023

The Belt and Road Initiative: A Key Pillar of the Global Community of Shared Future (Part 4)

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The financial cooperation mechanisms are maturing. China Development Bank (CDB) has promoted the establishment of multilateral financial cooperation mechanisms such as China-Central and Eastern Europe Interbank Consortium, the China-Arab Countries Interbank Association, China-ASEAN Interbank Association, the ASEAN Plus Three Interbank Cooperation mechanism, China-Africa Interbank Association, and the Association of China-LAC Development Financial Institutions. The Industrial and Commercial Bank of China (ICBC) has promoted the Belt and Road Interbank Regular Cooperation (BRBR) mechanism.

As of the end of June 2023, a total of 13 Chinese-funded banks had established 145 first-tier offices and branches in 50 BRI partner countries; some 17.7 million businesses in 131 partner countries had opened UnionPay services, and 74 partner countries had opened UnionPay mobile payment services. The Belt and Road Innovation and Development Center, the Research Center for Belt and Road Financial and Economic Development, and the China-IMF Capacity Development Center have been established.

China has signed bilateral currency swap agreements with 20 partner countries and established renminbi (RMB) clearing arrangements in 17 partner countries. The number of participants, business volume, and influence of the RMB cross-border payment system have gradually increased, effectively facilitating trade and investment.

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Financial regulation cooperation and exchanges have continued to move forward. China Banking and Insurance Regulatory Commission (now National Administration of Financial Regulation), China Securities Regulatory Commission (CSRC), and regulatory agencies from multiple other countries have signed memorandums of understanding (MoUs) for regulatory cooperation, facilitating the establishment of regional regulatory coordination mechanisms, promoting efficient allocation of funds, strengthening risk control, and creating sound investment conditions for various financial institutions and investment entities.

The channels and platforms for investment and financing are constantly expanding. China has funded the establishment of the Silk Road Fund (SRF) and established the Asian Infrastructure Investment Bank (AIIB) with other participating countries. The SRF specifically serves BRI cooperation. By the end of June 2023, the fund had signed agreements on 75 projects with committed investment of about US$22 billion; the number of AIIB members had reached 106, and the bank had approved 227 projects with a total investment of US$43.6 billion. The projects involve transport, energy, public health and other fields, providing investment and financing support for infrastructure connectivity and sustainable economic and social development.

China has actively participated in various existing financing arrangements. It has signed memorandums of cooperation with international financial institutions such as the World Bank and the Asian Development Bank, worked with international financial institutions to establish a multilateral development financing cooperation center, strengthened third-party market cooperation in investment and financing with the European Bank for Reconstruction and Development, and carried out joint financing with the International Finance Corporation, the African Development Bank and others. These moves have effectively mobilized market capital.

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China has initiated the establishment of international economic cooperation funds such as the China-Eurasian Economic Cooperation Fund, the China-LAC Cooperation Fund, the China-Central and Eastern Europe Investment Cooperation Fund, the China-ASEAN Investment Cooperation Fund, the China-LAC Industrial Cooperation Investment Fund, and the China-Africa Fund for Industrial Cooperation. These have effectively expanded investment and financing channels for partner countries.

The CDB and the Export-Import Bank of China (China Eximbank) have each set up special loans for the BRI to pool resources to increase financing support for BRI cooperation. By the end of 2022, the CDB has provided direct high-quality financial services for more than 1,300 BRI projects, playing a leading role in guiding development finance, and pooling all kinds of domestic and foreign funds for BRI cooperation. The balance of loans of China Eximbank for BRI projects reached RMB2.2 trillion, covering 130-plus participating countries and driving more than US$400 billion of investment and more than US$2 trillion of trade. China Export & Credit Insurance Corporation has fully applied export credit insurance and actively provided comprehensive guarantees for building the Belt and Road.

Innovative investment and financing methods are steadily being explored. Various models such as funds and bonds have been developed, and BRI financial cooperation is improving.

China’s securities industry has set up a number of BRI-themed funds and indexes. In December 2015, the CSRC officially launched a pilot project for overseas institutions to issue RMB-denominated bonds (panda bonds) in China’s exchange-traded bond market. By the end of June 2023, overseas issuers in total had issued 99 panda bonds in China’s exchange-traded bond market, with a total value of RMB152.54 billion; 46 BRI-themed bonds had been issued, with a total value of RMB52.72 billion.

Green finance is steadily developing. In May 2019, the ICBC issued the first green BRBR bond that conformed to both international and domestic green bond standards. By the end of 2022, more than 40 large global institutions had signed the Green Investment Principles for the Belt and Road. In June 2023, China Eximbank issued financial bonds for promoting international cooperation in building the Belt and Road and supporting infrastructure construction of partner countries. China’s domestic stock and futures exchanges have steadily promoted practical cooperation in equity, products, technology and other fields with the exchanges in partner countries, and actively supported the development of exchanges participating in or holding shares in BRI projects, such as the Astana International Exchange in Kazakhstan, the Pakistan Stock Exchange, and the Dhaka Stock Exchange in Bangladesh.

Debt sustainability has continued to improve. Based on the principle of equal participation and benefit and risk sharing, China and 28 countries approved the Guiding Principles on Financing the Development of the Belt and Road, encouraging the governments, financial institutions and enterprises of participating countries to attach importance to debt sustainability and improve their debt management capability. Drawing on the debt sustainability framework of low-income countries endorsed by the International Monetary Fund and the World Bank, China has developed tools based on the actual conditions of participating countries, and issued the Debt Sustainability Framework for Participating Countries of the Belt and Road Initiative. All parties are encouraged to use it on a voluntary basis.

To avoid causing debt risk and financial burden to the countries where BRI projects are located, China has prioritized economic and social benefits and provided loans for project construction based on local needs and conditions. The key areas of investment are infrastructure projects designed to increase connectivity, and projects for public wellbeing urgently needed in participating countries. These have brought effective investment, increased high-quality assets, and boosted development momentum.

Many think tank experts and international institutions have pointed out that almost all the BRI projects are initiated by the host countries with the goals of growing their economies and improving their people’s lives. In the process, the logic of economics has taken precedence over geopolitics.

5. Solid foundations for people-to-people ties

People-to-people ties are the social foundations of BRI cooperation. The participating countries have passed on and carried forward the spirit of friendly cooperation of the ancient Silk Road, cooperated on exchanges in culture, tourism, education, think tank and the media, and promoted mutual learning among civilizations and cultural integration and innovation. A model of people-to-people exchanges characterized by dynamic interactions and diversity has underpinned public support for furthering the initiative.

Cooperation on culture and tourism is rich and colorful. By the end of June 2023, China had signed cultural and tourism cooperation documents with 144 BRI partner countries.

China has created cooperation platforms together with participating countries, including the Silk Road International League of Theaters, the Silk Road International Museum Alliance, the Network of Silk Road Arts Festivals, the Silk Road International Library Alliance, and the Silk Road International Alliance of Art Museums and Galleries. These platforms have a total of 562 members, including 326 cultural institutions from 72 partner countries.

China is steadily expanding international cultural exchanges. China has launched the Cultural Silk Road program, and organized signature events such as the Happy Chinese New Year celebrations, the Nihao China tourism promotions, and the Silk Road: Artists’ Rendezvous art exhibition. It has worked with Brunei, Cambodia, Greece, Italy, Malaysia, Russia and ASEAN to co-host cultural and tourism activities at designated years. China and BRI partner countries have hosted events in a reciprocal manner, ranging from cultural relics exhibitions, film festivals, arts festivals, book fairs and music festivals, and jointly translated and promoted each other’s publishing, radio, film and television programs. They have also implemented the BRI-themed theater arts creation and promotion project, the Belt and Road International Art Project, and the Belt and Road good-neighborliness cultural project, and worked to protect Asian cultural heritage. China has established 46 China cultural centers in 44 countries, of which 32 are partner countries. China has established 20 tourism offices in 18 countries, eight of which are in partner countries.

Educational exchanges and cooperation are extensive and profound. China has released the Education Action Plan for the Belt and Road Initiative to promote international education exchanges and cooperation. By the end of June 2023, China had signed agreements with 45 participating countries on the mutual recognition of higher education degrees.

China has set up the Silk Road Program under the Chinese Government Scholarship scheme. Some of China’s provinces and Hong Kong and Macao SARs, as well as universities and research institutions have also set up scholarships for students from BRI partner countries.

Chinese universities and colleges have opened 313 Confucius Institutes and 315 Confucius Classrooms in 132 partner countries. The “Chinese Bridge” Summer Camp has invited nearly 50,000 young people from more than 100 partner countries to come to China for academic visits, and supported 100,000 Chinese language enthusiasts from 143 partner countries to learn Chinese and experience Chinese culture online.

Chinese universities and colleges have worked with more than 20 counterparts in partner countries from Asia, Africa and Europe to build a number of Luban Workshops – a professional training program dedicated to the sharing of expertise by China’s vocational education institutions.

China and UNESCO have jointly held the International Youth Forum on Creativity and Heritage Along the Silk Roads and relevant activities in seven consecutive years, and established the Silk Roads Youth Research Grant which has funded 24 youth research projects. The Atomic Energy Scholarship of China has funded the education of nearly 200 Master’s and Doctoral students in the field of peaceful use of nuclear energy for 26 BRI partner countries.

Participating countries have capitalized on the demonstration and driving role of the University Alliance and the Alliance of International Science Organizations

Media and think tank cooperation has yielded fruitful results. BRI participating countries have held the Media Cooperation Forum on Belt and Road six times, and established the Belt and Road Media Community. The China-Arab States Forum on Radio and Television Cooperation, the Forum on China-Africa Media Cooperation, the China-Cambodia Radio and Television Annual Regular Cooperation Conference, the ASEAN-China Media Cooperation Forum, the Lancang-Mekong Audiovisual Week, and other bilateral and multilateral cooperation mechanisms have been set up. International organizations such as the Asia-Pacific Broadcasting Union and the Arab States Broadcasting Union have become active and important platforms for building consensus among participating countries.

Media outlets in China and partner countries have jointly established the Belt and Road News Network, which launched the Silk Road Global News Awards. By the end of June 2023, the network’s members had increased to 233 media outlets in 107 countries.

Think tank exchanges have become more frequent. The Advisory Council of the Belt and Road Forum for International Cooperation was established in 2018. The Silk Road Think Tank Association has recruited 122 partners in Asia, Africa, Europe, and Latin America. Sixteen Chinese and foreign think tanks have established the Belt and Road Studies Network.

Source: The State Council Information Office of the People’s Republic of China

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