Providing reliable financial services for Belt and Road Initiative

Solving the financial connectivity issue is central to carrying out projects of the Belt and Road Initiative and helping enterprises to go global. There should be a multi-layer financial support system, as well as a financial risk management and control system for the initiative, so as to meet the huge funding demands from these projects and expand investment and cooperation channels.

Support from international, regional and domestic financial institutions has ensured the implementation of the initiative since it was proposed in 2013.  As of the end of 2016, nine Chinese banks had founded 62 direct branches in 26 countries along the Belt and Road routes, including 18 subsidiaries, 35 sub-branches and nine representative offices; China Development Bank had loaned US$168.2 billion to support bilateral cooperation projects in eight countries as well as building of three multilateral economic corridors; The Silk Road Fund had invested an accumulative total of US$6 billion in 15 projects.

The China Export and Credit Insurance Corporation has invested more than US$440 billion in 1,097 "going-global" projects since 2013. And the Asian Infrastructure Investment Bank has provided US$1.7 billion to nine projects related to the initiative.

To avoid the financial risks behind the huge investments, there should be a policy coordination mechanism among the countries taking part in the initiative.

China should include risk management and control in its construction, so as to better protect the security of the country's overseas investments and economic interests. A special risk management committee for the Belt and Road Initiative can be established to take charge of the financial security of the country's foreign investment.

It is also important to establish an authoritative risk evaluation system and a global investment risk data base to serve the needs of China's financial agencies and enterprises in their overseas operation. 

China should play up the role of export credit insurance in risk prevention and control. Some risks along the Belt and Road routes cannot be effectively solved through the efforts of relevant enterprises alone. The Chinese government should provide more policy insurance support to manage and control these risks.

In recent years, the policy insurance agencies have established a series of service systems to offer export credit insurances, foreign investment insurance, guarantee business, credit assessment, domestic trade credit insurance and accounts receivable management. With the further implementation of the initiative, they should expedite upgrading of their products and services to better meet the needs of Chinese enterprises going global in a more sustainable way.

(The authors Li Zhuo and Ruan Zhen are from Economics and Management School of Wuhan University.  This is an excerpt from an article co-authored by them which was first published in Chinese in Guangming Daily. The translator is Li Yang.)