BEIJING — Chinese banks are looking to tap the opportunities arising
from the huge investment and financing demands in the Belt and Road
regions, where investors are attracted by the potential of
infrastructure and less-developed industries.
"Most countries along the Belt and Road are developing economies that
have numerous opportunities in infrastructure, rail transit, urban
development, logistics, cross-border e-commerce and other areas," said
Hong Qi, chairperson of China Minsheng Bank, a leading joint-stock
Infrastructure financing demand alone will amount to $10 trillion in the next five years, Hong said at a recent forum.
Betting on these prospects, the Beijing-based lender has signed
lending agreements worth over $10 billion with businesses from more than
30 countries and regions, with more projects financed via
public-private partnership in the pipeline.
Minsheng is not the only bank that has strengthened its push in the Belt and Road Initiative.
Other lenders including the Industrial and Commercial Bank of China and
China Everbright Bank have also jumped into action. By the end of 2016,
nine Chinese banks had set up 62 branches in 26 countries and regions
along the Belt and Road, data from the China Banking Regulatory
"There are bright prospects for banks to finance the Belt and Road Initiative," former Chinese Vice-Foreign Minister He Yafei has said.
Proposed by China in 2013, the Belt and Road Initiative aims to build
trade and infrastructure networks connecting Asia with Europe and
Africa based on ancient land and maritime trade routes. Analysts believe
opportunities are sprouting for global businesses to increase their
presence and investment in the to-be-booming regions where public
facilities still lag behind.
Multilateral lender the Asian Infrastructure Investment Bank and the Silk Road Fund were founded to finance the Belt and Road.
Backed by financial support, investment went up steadily along the
Belt and Road. During the first 10 months of 2017, Chinese investors put
forward $11.2 billion in 53 countries and regions along the Belt and
Thanks to the capital pumped in, Asian infrastructure is improving
rapidly, with transportation networks improved and more public
facilities erected, ranging from power stations to hospitals.
"More tangible progress will have been made by 2020," said Zhang
Yansheng, a researcher at China Center for International Economic
Exchanges, citing railroads and expressways that will stretch to more
areas including Southeast Asia and the Mediterranean.
"Investment growth in the Belt and Road will pick up pace in a couple
of years, with double-digits compound increase expected in 2018 and
2019," said Robin Xing, Morgan Stanley's chief China economist.
Not only will infrastructure improve, but global trade will also
benefit, Xing said. "Belt and Road countries will see a 10-percent
increase in their exports in ten years because of Chinese investment as
better ports and railways will facilitate cargo flows."
While Belt and Road construction is in full swing, concerns about
investment risks also linger mainly due to regional political and
Risks facing Chinese State-owned enterprises (SOEs), major investors
in the Belt and Road regions, are completely controllable, Xiao Yaqing,
head of the State-owned Assets Supervision and Administration Commission
(SASAC), has said.
Over the last three years, 47 Chinese SOEs supervised by the SASAC
have taken part in 1,676 projects in countries and regions along the
Belt and Road spanning energy, infrastructure and industrial
cooperation. The investment was well-planned and organized, and
supervision of the decision-making process has been toughened, Xiao
Xing said the risks will be low. "Even if investment amounted to $60
billion a year...it still only accounts for less than a third of China's
current account surplus and around 0.5 percent of the nominal GDP."