CBF50 Closed-door Seminar and Macro-Finance Salon (No. 72): Belt and Road Initiatives and Foreign Investment
2017-10-21 IMI
Ou Xiaoli focused on three principles of “Belt and Road Initiative”. He pointed out that the success of this initiative exceeding expectation lies in three principles: discussion, shared growth and collaboration. The principle of discussion deals with how to build. When working together with other countries, China has never brought its own understanding, standards and ideology into cooperation. Instead, China emphasizes seeking common grounds while reserving differences, and respects development paths and governance modes of various countries. The principle of collaboration solves the issue of who to build. China believes that the Belt and Road Initiative is a common cause for every country involved, thus third-party cooperation matters. The principle of “shared growth” solves the problem of why to build. The initiative is not a foreign aid or poverty alleviation program; rather, it involves huge political and economic interests for China. Its partners in Europe, Asia and Africa, in spite of great differences, are all under-developed and have strong demands for improving people's livelihood and growing economy.
Lin Dajian focused on the economic risks facing enterprises, the problems of their home countries and the problems within China’s enterprises. She pointed out that China, like many other countries, cannot be immune from those problems encountered in developing programs, such as the China–Pakistan Economic Corridor and the Bangladesh-China-India-Myanmar Forum for Regional Cooperation (BCIM). Therefore, President Xi's ideas of “community of common destiny” and “inclusiveness globalization” indicate the trend of the Belt and Road Initiative. She also pointed out another challenge: different political systems. In some cases, enterprises lack knowledge of the democratic system of neighboring countries, and did not adjust the way to run the project, eventually leading to problems in making investment and facing higher risks. Therefore, the key to reduce risk is to increase the sense of gain for people along the “Belt and Road” or in the investment areas.
Zhang Jidong firstly supplemented the risks facing the enterprises going global and clarified the underlying ecological and environmental risks. He then, based on his research on investment and financing, discussed the characteristics and problems of the current investment and financing for international capacity-building cooperation and raised some ideas of international capacity-cooperation.
Qu Fengjie mainly explored whether it is possible to find a solution to the internationalization of the RMB under the framework of this initiative. She also pointed out that the important breakthroughs in Renminbi internationalization are the “Belt and Road” and the Gold-Backed-Oil-Yuan. As for economic imbalance, she believed that the “Belt and Road” is undoubtedly a solution raised by China. She then put forward the six-pronged approach to promote the initiative and how to make the initiative one of the major mechanisms and platforms for coordinating economic cooperation and macroeconomic policies along the line. At last, she suggested a solution to the more complicated Triffin challenge faced with by Renminbi: seeking a breakthrough from the initiative and regionalization, transitioning from the sub-cycle of industry to monetary finance and making RMB center of the sub-cycle through the “Belt and Road Initiative”.
After the tea break, a roundtable discussion, chaired by Qu Fengjie, was attended by experts and scholars. Wei Benhua first proposed that more people are welcome to join in the discussion. He then shared his thinking on the connection between market operation and a country’s diplomatic policies when enterprises serve as the main body. He also pointed out that the “Belt and Road Initiative” has received financial support and follow-up by banks really matters.
Sun Lujun mentioned issues that businesses should focus on when investing abroad. He also discussed the way to promote and implement international capacity cooperation, China’s response to the sources of funding for the initiative and understanding of irrational investment.
Shi Yan mainly introduced CDB's external investment and financing. She said that in the process of "going global", private, small to medium-sized and state-owned enterprises all have confronted with higher risks due to a lack knowledge of neighboring countries. The guidance of central SOE incentive mechanism, CDB's main research, yet proved to be unsatisfactory. She also stressed that inefficient communication will also affect China’s enterprises to participate in international capacity cooperation. Thus, the cooperation between banks and enterprises matters and deserves more efforts. She made it clear that CDB has contributed a lot to promote RMB internationalization.
Er-Cheng Hwa believed that the Belt and Road Initiative is in its prime, since China is the strongest driving force of global economy which is undergoing a power shift. The motivation of going out of the motivation lies inside the country, and RMB internationalization will be achieved for the foreseeable future. He pointed out that what matters most for the initiative is the investment environment, since bilateral cooperation and agreements could run into financial problems. He also raised the issue of mutual learning between banks.
