A Joint People's Bank of China - International Monetary Fund High-level Conference on the Belt and Road Initiative (BRI)
April 12, 2018
The Silk Road Economic Belt and 21st Century Maritime Silk Road, often referred to as the “Belt and Road Initiative” was launched by President Xi Jinping in 2013. The Belt and Road Initiative (BRI) aims to promote policy dialogues, foster connectivity and cooperation in infrastructure, trade, finance, and ‘people-to-people exchanges’. It aims to connect Asia with Europe and Africa, through the Middle East and reaching Latin American countries. It is expected to raise significant resources from China and various other sources, including the private sector, to support development, mainly infrastructure development, and improve growth prospects.
The BRI has the potential to bring much-needed infrastructure to countries and facilitate trade and financial flows, thus acting as a source of growth and fostering international cooperation. Achieving these goals will require strong policy frameworks to ensure high-quality projects and sufficient macroeconomic and institutional capacity in partner countries to absorb investment flows, reap the benefits and manage the associated risks.
China has been working with its partners, including participating countries and international organizations, to make sure the BRI reaches its full potential and the benefits are shared as widely as possible. In particular, close cooperation with the IMF will help in promoting strong policy frameworks as an important pillar for the success of the BRI. The conference will discuss the policy frameworks needed for a successful BRI, with focus on those areas where the IMF in collaboration with other international financial institutions can offer policy advice and capacity building support. It will bring together high-level policy makers from China and a number of partner countries (from Africa, Asia and the Pacific, the Middle East and Central Asia, Eastern Europe, and Latin America) to discuss their vision for a successful BRI and the policy frameworks needed to support it. The sessions will discuss particular topics where the Fund can offer specific policy advice, capacity building and tools, such as managing investment projects and increasing the efficiency of public investment, maintaining debt sustainability while scaling up infrastructure spending, and enhancing financial connectivity.
The conference is sponsored by the China-IMF Capacity Development Center (CICDC), Tsinghua University PBC School of Finance and International Financial Corporation. The CICDC is a new IMF center funded by the Chinese government to provide training and other capacity development events for China and other IMF member countries, including those participating in the BRI. The envisaged outputs of the conference include a press release and an e-book with a compilation of the background papers.
Macroeconomic and Financial Frameworks for the Successful Implementation of the BRI
Ritz Carlton, Financial street
Welcome Dinner Hosted by the PBC and the IMF
Venue: Temple of Heaven (2nd floor)
Welcome and Opening Remarks
YI Gang, Governor, PBC
Christine Lagarde, Managing Director, IMF
Inauguration of China-IMF Capacity Development Center (CICDC)
What Can the BRI Do to Help Participating Countries?
The BRI has the potential to boost growth and foster global integration through higher investment in infrastructure, greater trade integration (including integration into global value chains), and enhanced financial connectivity. As the Initiative moves forward, three key questions arise: (i) what are the main objectives and desirable outcomes, (ii) what are the possible risks or impediments, and (iii) what can policymakers do to enhance the benefits while minimizing potential risks, including by strengthening domestic institutions. This session will take stock of the experience so far and set the stage for the discussions that follow on specific policy frameworks.
Moderator: Markus RODLAUER, Deputy Director, Asia and Pacific Department, IMF
Macro-Financial Policy Implications of the BRI
The BRI can enhance financial connectivity and help bridge the gap between infrastructure needs in emerging markets/low income countries and China’s surplus savings and investment capacity. In low-income countries, greater connectivity can foster financial development and inclusion, including by using fintech. However, there is a need to be conscious of debt sustainability risks, given the size of participating government BRI commitments, when scaled against current GDP, fiscal space, and foreign currency reserves. Rapid increases in financial flows could pose challenges to the typical pace and sequencing of financial deepening. Key questions include: (i) what types of financing arrangements would best mitigate macro-financial risks; (ii) what can authorities do to monitor effectively the buildup of risks to financial stability; and (iii) which micro- and macroprudential tools can effectively ameliorate the destabilizing impact of large-scale financial flows in shallow financial systems.
Moderator: MA Jun, Director, Center for Finance and Development, Tsinghua National Institute of Financial Research
Lunch 12:30 PM
Venue: Temple of Heaven (2nd Floor)
Keynote Speech by ZHU Min, President of National Institute of Financial Research, Tsinghua University and Former Deputy Managing Director, IMF
2:15 PM-3:30 PM
Strengthening Fiscal Frameworks for a Successful BRI
This session will focus on the importance of fiscal institutions and frameworks in achieving macroeconomic stability and supporting long-term inclusive growth, and the role that capacity building can play to strengthen institutions. A sound fiscal framework provides the basis for governmental policies that are sustainable and transparent, leading to effective policy decision-making. Topics to be explored include: medium-term fiscal frameworks, fiscal rules, identification and mitigation of fiscal risks, debt sustainability, medium-term revenue strategies (including customs and taxation of MNCs) and the scope of government operations (for example, monitoring of PPPs and SOEs).
Moderator: Michael KEEN, Deputy Director, Fiscal Affairs Department, IMF
3:45 PM-5:15 PM
Bringing in Other Stakeholders (e.g. Private Sector) to Maximize Benefits of BRI
Strong and sustainable growth requires that public investment be accompanied by rising private investment. Indeed, to maximize the growth impact of BRI projects and ensure commercial and financial viability, bringing in private sector participation can help. This will foster strong project preparation, execution, and financing. Strengthening the business environment, including the institutional and regulatory frameworks for private sector activity, is an important objective in most BRI countries. This session will focus on how the BRI can successfully catalyze more private investment, including in infrastructure. The session will include IFIs experienced in managing such private sector participation, such as the IFC.
Moderator: Hans Peter LANKES, Vice President, International Financial Corporation
5:15 PM-5:45 PM