Development Finance Institutions Jointly Support the Belt and Road Initiative

During the construction of Belt and Road, China is seeking to form a new foreign cooperation pattern which, with cooperation in basic infrastructure and production capacity as an approach, is backed up financial cooperation, says a report released by National Institution for Finance & Development.

China actively carries out financial cooperation with countries along the Belt and Road and international financial institutions and sets up international platforms to meet the financial services needs of those countries for infrastructural construction.

Development financial institutions that take part in the Belt and Road Initiative fall into the following three types: multilateral development financial institutions, Chinese policy banks and special investment funds. Of these institutions, international multilateral development financial institutions are the pioneers while Chinese policy banks serve as a strong pillar of financial cooperation. Since 2013, China Development Bank (CBD) has signed more than 140 agreements with partners along the Belt and Road countries, involving a total financing amount of more than 130 billion U.S. dollars.

As an engine for economic globalization, the Belt and Road Initiative places infrastructural construction on top agenda. Only better infrastructural connectivity can encourage business investment, trade and people-to-people exchanges. Characterized by gigantic amount of investment, long construction cycle and long-term fund occupancy but low earnings, infrastructural construction calls for long-term, stable, big-amount and low-cost funding. As regions along the Belt and Road are mostly emerging economies and developing countries, their economic strength and financing capabilities are relatively weak.

An effective and sustainable financing mechanism should be established in consideration of the serious bottlenecks constraining infrastructural development and financing along the Belt and Road.

Development Finance Institutions Jointly Support the Belt and Road Initiative.pdf