Past Event

Financing the Belt and Road Initiative

The Belt and Road initiative, recently embarked on by China, aims to improve cross-border infrastructure in order to reduce transportation costs across a massive geographical area between China and Europe.

Date: February 9, 2017, 8:30 am Topic: Global Economics & Governance

SUMMARY

The Belt and Road (B&R) initiative, a global infrastructure project between China and Eurasia, was examined at this Bruegel’s event. In particular, the discussion focused on the question how this mammoth project can be financed. The panel, consistent of experts from both sides, provided the audience with an overview about current investment in the B&R initiative, highlighting future opportunities and challenges.

China’s economy is characterized by a large surplus capacity. As such, it needs a “backyard” to further expand trade and bolster economic growth. The B&R initiative could play a crucial role in achieving those goals by providing the necessary infrastructure and thus boost trade between China and Europe. By Bruegel’s estimation, the overall effect on European trade could amount to an increase of more than 6% due to a reduction of transportation costs.

The main players in financing this initiative were pointed out to be Chinese and European investment banks and corporation, together with commercial banks and funds. As pointed out by Sun Mingxi, Chinese Mission to the EU, some substantial commitments to the B&R project were already made by China. However, Alicia García-Herrero, Bruegel, warned about a worsening asset quality of Chinese banks and questioned their ability to stem the project on their own.

Alessandro Carano, European Commission, argued that there is a general openness towards investment within the entire EU. The dialogue with China has already started in 2015 and will be continued. However, future investment has to be sustainable and possess aligned priorities in order to attract investors. Overall, the Belt and Road initiative could offer high return opportunities.

Addressing questions from the audience, Sue Anne Tay, HSCB, highlighted the positive effects of the project on areas such as agriculture, medicine and tourism. Asked about the impact of the abolished TTIP agreement on the B&R initiative, the panel argued that it will not discourage investors and might even make the project a more feasible reality.

Notes by Dmitry Chervyakov

Video and audio recording


The Belt and Road initiative has the goal to promote regional and cross-continental connectivity between China and Eurasia. The ‘One Belt’ and ‘One Road’ refer to China’s proposed ‘Silk Road Economic Belt’ and ‘Maritime Silk Road’, and will consist of a series of infrastructure investments to facilitate trade between the regions involved.

Potential challenges abound with financing the planned $890bn in investments.

What will be the role of AIIB, a China-led multilateral institution with 57 member countries? Could European banks help finance the Belt and Road through cross border lending?

EVENT MATERIALS

Presentation by Alicia García-Herrero

Schedule

Feb 9, 2017

8:30-9:00

Check in and Breakfast

9:00-10:00

Panel discussion

Chair: Jianwei Xu, Non-resident Fellow

Alessandro Carano, Member of Cabinet, Commissioner Bulc

Alicia García-Herrero, Senior Fellow

SUN Mingxi, Counsellor for Economic Affairs, Chinese Mission to the EU

Sue Anne Tay, Senior Vice President, Group Strategy office, HSBC

10:00-10:30

Q&A

10:30

End

Speakers

Alicia García-Herrero

Senior Fellow

SUN Mingxi

Counsellor for Economic Affairs, Chinese Mission to the EU

Jianwei Xu

Non-resident Fellow

Alessandro Carano

Member of Cabinet, Commissioner Bulc

Sue Anne Tay

Senior Vice President, Group Strategy office, HSBC

Location & Contact

Bruegel, Rue de la Charité 33, 1210 Brussels

Matilda Sevon

matilda.sevon@bruegel.org

Read article More on this topic More by this author

Blog Post

US mid-term elections and the global economy

Democrats won control of the House and Republicans held onto the Senate in the most consequential US mid-term elections in decades. Bowen Call reviews economists’ and scholars’ analyses of the impact this might have on the world economy.

By: Bowen Call Topic: Global Economics & Governance Date: November 12, 2018
Read article More on this topic More by this author

Opinion

The global economy’s three games

In this column, Jean Pisani-Ferry portrays the current international economic and geopolitical order as increasingly reminiscent of chess. Three key players: the US, China and a loose coalition of the other G7 members play three games simultaneously, and no one knows which game will take precedence.

By: Jean Pisani-Ferry Topic: Global Economics & Governance Date: October 29, 2018
Read article More on this topic More by this author

Opinion

How could Europe benefit from the US-China trade war?

Under pressure from the US, Beijing is set to be more open to making new allies.

By: Guntram B. Wolff Topic: Global Economics & Governance Date: October 18, 2018
Read article More on this topic More by this author

Podcast

Podcast

Backstage: The new balance of Asia-EU-US trade relations

Amid the Asia-Europe Economic Forum on the fringes of the 12th ASEM Summit, Bruegel senior fellow hosts a conversation on developing global trade relations, with guests Moonsung Kang, professor as Korea University, and Michael G. Plummer, director at SAIS Europe – Johns Hopkins University, for an episode of the Bruegel Backstage series on ‘The Sound of Economics’.

By: The Sound of Economics Topic: Global Economics & Governance Date: October 17, 2018
Read article More on this topic More by this author

Opinion

Global markets’ tepid reaction to China’s new opening

China’s accession to the World Trade Organisation in 2001 was greeted with great fanfare. But near silence has greeted the recent removal by the China Banking and Insurance Regulatory Commission of caps on foreign ownership of Chinese financial institutions. For Beijing, the apparent lack of interest might be an issue of too little, too late.

By: Alicia García-Herrero Topic: Global Economics & Governance Date: October 11, 2018
Read article More on this topic More by this author

Opinion

Ten years after the crisis: The West’s failure pushing China towards state capitalism

When considering China’s renewed state capitalism, we should be mindful of the damage done by the 2008 financial crisis to the world's perception of Western capitalism.

By: Alicia García-Herrero Topic: Global Economics & Governance Date: October 10, 2018
Read article More on this topic More by this author

Blog Post

Inequality in China

After amply discussing income inequality in Europe and the US, economists are now looking at the magnitude, implications and possible remedies for this phenomenon in the context of the Chinese economy.

By: Silvia Merler Topic: Global Economics & Governance Date: September 24, 2018
Read article More on this topic More by this author

Opinion

Japan must boost R&D to keep rising Chinese rivals at bay

As China shifts into a more advanced industrialised economy, Japan has slowly but surely lost to some of its comparative advantages to its rival. One possible solution to help the government keep pace would be to concentrate research and development efforts on a few key sectors where Japanese players still hold a large competitive lead.

By: Alicia García-Herrero Topic: Innovation & Competition Policy Date: September 20, 2018
Read article More on this topic More by this author

Podcast

Podcast

Backstage: Developing the EU-China relationship amid rising global trade tensions

Bruegel director Guntram Wolff is joined by Alicia García-Herrero, senior fellow at Bruegel, and Zhang Weiwei, director at The China Institute of Fudan University, following up a Bruegel conference focused on the potential for closer economic links between China and the EU.

By: The Sound of Economics Topic: Global Economics & Governance Date: September 20, 2018
Read article More on this topic More by this author

Opinion

China Made Two Promises in Africa. Can It Keep Them?

China has committed to a market-driven relationship with Africa, as well as a new $60 billion investment plan on the continent, following the recent China-Africa summit. In this light, the author assesses the China-Africa economic relationship, suggesting those new objectives may not be so easy to achieve.

By: Alicia García-Herrero Topic: Global Economics & Governance Date: September 19, 2018
Read article More on this topic More by this author

Opinion

China real estate developers: a grey rhino in the jungle of financial risks

The author assesses the Chinese real estate industry’s liquidity concerns and its leverage, which is estimated to be four times higher than its global peers.

By: Alicia García-Herrero Topic: Global Economics & Governance Date: September 18, 2018
Read about event

Past Event

Past Event

China's digital economy

How to measure China's digital economy?

Speakers: Alicia García-Herrero, Claudia Vernotti and Reinhilde Veugelers Topic: Global Economics & Governance, Innovation & Competition Policy Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: September 17, 2018
Load more posts