SCIO briefing on development of Belt and Road Initiative

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Ning Jizhe, vice director of the Office of the Leading Group for the Belt and Road Initiative, deputy head of the National Development and Reform Commission, head of the National Bureau of Statistics

Qian Keming, vice minister of commerce

Zhang Jun, assistant minister of foreign affairs

Hu Kaihong, spokesperson for the State Council Information Office of China

August 27, 2018

Lianhe Zaobao:

Earlier you mentioned, China's direct overseas investment for the Belt and Road countries reached over US$70 billion. Some wonder if there will be returns on that huge amount of money. How is the effectiveness and returns of these investments so far? Did it achieve the expected results? In addition, regarding the contribution of these countries along the route, we are aware that many of the Belt and Road projects are funded by loans. Some of these countries, however, seem to have no ability to pay the debt. For example, under a new administration, Malaysia's East Coast rail project has been canceled and the China-Pakistan Economic Corridor may also face uncertainties. Has China learned a lesson from those cases and will China change the way how the Belt and Road Initiative is implemented in the future? Thank you.

Qian Keming:

Your question involves many aspects.

First of all, let me talk about the debt issue. As you know, finance is the lifeblood of economic activities, especially in the initial development stage. I have read several reports on the matter, one of which is by the Asian Development Bank (ADB). It says that a total of US$1.7 trillion of infrastructure spending is needed in Asia every year through 2030. Calculated from the current investment scale, there is still a gap of over US$800 billion investment each year. Another report from the African Development Bank (AfDB) says that a total of US$130 billion to US$170 billion infrastructure investment is needed each year in Africa, and currently only less than one third of the amount is spent. That is to say, Asia is a little better off, it is receiving half of the total investment for infrastructure it needs and missing the other half. Africa is missing two thirds. As is known to all, infrastructure investment plays a very important role in promoting economic growth and increasing people's well-being.

Second, most of China's current investments in the countries under the Belt and Road Initiative are infrastructure related which include the building of railway lines and ports. I believe these infrastructure investments will have a long-term and important role in promoting the economic growth in those countries.

Third, infrastructure investment, mainly on public goods, normally takes a fairly long period of time to show returns. Moreover, after the global financial crisis, international commodity prices dropped significantly. Although they have rebounded slightly, the prices are still far below the pre-crisis level. The price of crude oil reached US$150 per barrel at its peak and then fell back to US$20, US$30 per barrel. Recently, the price rose to around US$70 per barrel, but is still half of the price at its peak. The prices for mineral products have not rebounded much, which hurt the economy in some African and Asian countries. Some of the countries have seen rising debt levels, which is a reality we must face.

Fourth, China has been trying to promote economic development in the host countries through the Belt and Road Initiative and avoid creating too much burden for them. Therefore, we have chosen some projects that can deliver both economic benefits and increase employment, taxes and exports in the countries involved in the Belt and Road Initiative. While embracing bilateral, trilateral and multilateral cooperation, as Mr. Ning mentioned just now, we also welcome involvement from developed countries and multilateral financial organizations to spend and manage the money more efficiently.

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