Initiative provides win-win fruits for all

Multi-channel for financing projects

Cheng Cheng, an associate research fellow at the Industrial Research Department of Chongyang Institute for Financial Studies, Renmin University of China

China encourages financial institutions to conduct business in renminbi, providing financing support for the Belt and Road Initiative. However, such investment or loans are not aids.

"Aid" is a technical term and usually refers to official development assistance, which is different from loans or investments. Since many countries along the Belt and Road routes are developing or relatively less developed, sometimes investments or loans from China might be developmental in nature.

Public finance must play a model role in attracting private financing for Belt and Road projects, and cooperation between governments could help build a better environment for investors. If coordinated efforts are made to make sure public finance and private capital work efficiently together to improve the infrastructure in the countries involved in the initiative, the costs of operating business could sharply decline. In this sense, infrastructure is not limited to facilities such as roads, railways and power plants but extends to "soft" areas such as the legal system, consumer service, commercial data collection and capacity training. Once hard and soft infrastructure improves, private investment will start flowing in. And the increase in official loans will in turn facilitate more private investment.

 

 

 

 

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