Financial Connectivity Shores Up Belt and Road Growth
BEIJING, Aug. 9, 2023 /PRNewswire/ — A news report from China Report ASEAN: Over the last 10 years since the Belt and Road Initiative (BRI) was proposed, the scale of financing under the framework has been expanding, and channels for financing have been diversifying, supporting construction of major projects and motivating countries along the route to work together to build a stable and diversified financing system. The Chinese yuan has enjoyed increasing influence. As trade and economic cooperation between China and ASEAN is growing in both quality and efficiency, settlement in local currency has been adopted in more transactions, laying a solid foundation for the development of the BRI.
Diversified Financing
Wang Zhimin, a research fellow with the Academy of China Open Economy Studies and director of the Institute of Globalization and China’s Modernization at Beijing-based University of International Business and Economics, called financial connectivity indispensable support for joint efforts to advance high-quality BRI development. It is the foundation for realizing trade and infrastructure connectivity and reinforces efforts to achieve policy and people-to-people connectivity.
- Statistics from China’s Ministry of Commerce showed that from January to April 2023, non-financial direct investment by Chinese businesses in countries along the Belt and Road totaled US$7.53 billion, up 9 percent year on year. Over the period, Chinese businesses finished contracted projects worth US$23.05 billion and signed new contracts worth US$29.74 billion in countries along the route, accounting for 54.9 percent and 50.2 percent of the total, respectively.
- Tu Yonghong, a professor with the School of Finance at Renmin University of China, said that entities participating in financial connectivity mainly include participating countries’ central banks, commercial banks, securities firms, and insurance companies as well as emerging multilateral development financial institutions such as the Asian Infrastructure Investment Bank (AIIB) and the Silk Road Fund. Together, they have formed a diversified financing system to serve BRI construction.
- By the end of 2022, with membership rising to 106, the AIIB had granted funding for 202 projects, totaling US$28.8 billion. The Silk Road Fund had signed funding agreements for more than 70 projects, committing investment of around US$21.5 billion, with 70 percent going to countries along the Belt and Road route to fund infrastructure projects and projects for resource development and production capacity cooperation.
- Chinese financial institutions have been the main driving force fostering financial connectivity under the BRI framework, and their role has been central. In 2017, China and six multilateral development institutions including the Asian Development Bank, the AIIB, and the World Bank signed a Memorandum of Understanding on Collaboration on Matters of Common Interest Under the Belt and Road Initiative. In 2019, they agreed to jointly build a Multilateral Cooperation Center for Development Finance. By the end of 2020, a total of 11 Chinese-funded banks had set up close to 80 subsidiaries in 29 countries along the Belt and Road.
- At the fifth China–Singapore (Chongqing) Connectivity Initiative Financial Summit, China and Singapore signed 90 contracts on major projects with contract value totaling 111 billion yuan (US$15.35 billion). Breakthroughs were made in issuance of overseas yuan-denominated bonds and cross-border assignment of credit. By the end of March 2023, cross-border financial projects under the framework of China–Singapore connectivity cooperation reached US$19.6 billion in value, benefiting more than 10 Chinese provincial-level regions including Chongqing, Guangxi, Sichuan, and Yunnan.
- Josephine Teo, Minister for Communications and Information and Second Minister for Home Affairs, said at the summit that strengthening financial cooperation and connectivity will help lower business costs and facilitate financing, risk management, and assets management. She added that it will promote China-ASEAN trade and economic development and cross-border investment and tap the regional potential to the full.
New Explorations in International Settlements
On April 4, 2023, Malaysia’s Prime Minister Anwar Ibrahim proposed launching an Asian Monetary Fund. On April 13, Brazilian President Luiz Inacio Lula da Silva delivered a speech at the headquarters of the BRICS New Development Bank in Shanghai. He passionately posed a series of questions. “Why do all countries have to base their trade on the dollar?” “Why can’t we trade with our own currencies?”
- Some have begun to seek alternative currency for international settlement and increased efforts to diversify their international reserve assets portfolio.
- Tu Yonghong
SDGs, Targets, and Indicators
1. Which SDGs are addressed or connected to the issues highlighted in the article?
- SDG 8: Decent Work and Economic Growth
- SDG 9: Industry, Innovation, and Infrastructure
- SDG 10: Reduced Inequalities
- SDG 17: Partnerships for the Goals
2. What specific targets under those SDGs can be identified based on the article’s content?
- SDG 8.1: Sustain per capita economic growth in accordance with national circumstances and, in particular, at least 7 percent gross domestic product growth per annum in the least developed countries.
- SDG 9.1: Develop quality, reliable, sustainable, and resilient infrastructure, including regional and transborder infrastructure, to support economic development and human well-being, with a focus on affordable and equitable access for all.
- SDG 10.4: Adopt policies, especially fiscal, wage, and social protection policies, and progressively achieve greater equality.
- SDG 17.3: Mobilize additional financial resources for developing countries from multiple sources.
3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?
- Indicator for SDG 8.1: Gross domestic product (GDP) growth rate
- Indicator for SDG 9.1: Investment in infrastructure projects
- Indicator for SDG 10.4: Gini coefficient or income inequality index
- Indicator for SDG 17.3: Financial resources mobilized from various sources
Table: SDGs, Targets, and Indicators
SDGs Targets Indicators SDG 8: Decent Work and Economic Growth 8.1 Sustain per capita economic growth in accordance with national circumstances and, in particular, at least 7 percent gross domestic product growth per annum in the least developed countries. Gross domestic product (GDP) growth rate SDG 9: Industry, Innovation, and Infrastructure 9.1 Develop quality, reliable, sustainable, and resilient infrastructure, including regional and transborder infrastructure, to support economic development and human well-being, with a focus on affordable and equitable access for all. Investment in infrastructure projects 9.4 Upgrade infrastructure and retrofit industries to make them sustainable, with increased resource-use efficiency and greater adoption of clean and environmentally sound technologies and industrial processes. Not mentioned in the article SDG 10: Reduced Inequalities 10.4 Adopt policies, especially fiscal, wage, and social protection policies, and progressively achieve greater equality. Gini coefficient or income inequality index SDG 17: Partnerships for the Goals 17.3 Mobilize additional financial resources for developing countries from multiple sources. Financial resources mobilized from various sources Behold! This splendid article springs forth from the wellspring of knowledge, shaped by a wondrous proprietary AI technology that delved into a vast ocean of data, illuminating the path towards the Sustainable Development Goals. Remember that all rights are reserved by SDG Investors LLC, empowering us to champion progress together.
Source: finance.yahoo.com
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