SCIO briefing on 'The Belt and Road Initiative: Progress, Contributions and Prospects'

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Xiao Weiming, director general of the Department of General Affairs at the Office of the Leading Group for Promoting the Belt and Road Initiative;

Song Lihong, director general of the Comprehensive Department at the Ministry of Commerce

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

April 22, 2019


China has promised to develop the Belt and Road into a sustainable and green path, and refuted claims of a so-called "debt trap." Do you have any details or concrete measures to share with us on this? In addition, does China have plans to introduce new laws and regulations on company investments to regulate future investments under the framework of the Belt and Road Initiative?

Xiao Weiming:

Thank you for your concern. Promoting the building of a green Silk Road is an important part of jointly building the Belt and Road Initiative. Over the past few years, Chinese companies that are "going global" have been adhering to the idea of green and environmentally friendly development, both in infrastructure investment and manufacturing investment. We have conducted strict environmental assessments in the building of hydroelectricity power plants, coal-fired power plants, roads and ports. We have even hired third-party independent organizations to do some preparatory research. In fact, due diligence is always performed in China by companies to produce a feasibility report. So we are upholding to the idea of green and environment-friendly development as we push forward in our projects.

We are willing to work with all parties concerned to follow through on our commitments to green development. We will strengthen international cooperation on eco-environmental protection to address climate change. We will improve the protection and restoration of the eco-system and develop "green finance." As to the platitudes on the "debt trap," I can say responsibly that since the initiative was proposed, no country has fallen into the so-called "debt trap" for participating in the building of the Belt and Road. On the contrary, all the participating countries have witnessed rapid development. Therefore, the so-called "debt trap" is a false proposition. Thank you.

Song Lihong:

Please allow me to share with you some of my thoughts and what I've learned. Recently, there were many stories about the so-called "debt traps." If a country, a family or an enterprise wants to make progress, the correct way is through self-accumulation before anything else. However, I want to emphasize that if you discover great potential of development, or if you are very confident of achieving development, you need to make extra efforts to realize it. In this situation, you need to use financial leverage tools. In other words, you need to borrow money to achieve development. How to judge if the timing is right for such a move? You must be able to obtain the loan. You must borrow money without doing harm to your reputation. On a country-level, especially those relatively less developed, or are under rather heavy debt burdens, I still don't think they should be deprived of the right of seeking development. Or, to put it another way, they should enjoy the right of seeking development by increasing their leverage ratio a little bit.

In this case, no matter who is involved — the country that lends the money, the country that borrows the money, or the enterprise that take a part in the cooperation, all face certain requirements. The borrower needs to pay close attention to its financial situation. It must focus on economic growth. In particular, it must intensify the efforts in infrastructure construction and industrial investment, so as to accelerate the industrialization process. Meanwhile, countries that lend the money, whether developed or emerging countries like China, are obliged to help the comparatively less developed countries improve their financing conditions. Regarding enterprises that take a part in the cooperation, as Mr. Xiao just said, they need to carry out feasibility studies to manage risks. What is the return of foreign investment? We should understand this concept from two perspectives: One is the time value of the funding, the other is the risk premium of the investment. If you cannot manage the risks, how can you make profits?

Solving the debt issue needs the efforts of all parties involved. We can follow the principle of "consultation, collaboration and benefit for all" to gradually tackle the problem. Although some countries are under high debt pressures, their debts will gradually fall when their industrialization, urbanization and modernization are accelerated. One thing for sure is that without development, without hard work, there will be no hope at all. Thank you. 

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