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Outlook of financing along the road from the perspective of international cooperation in "One Belt One Road" strategy

As the top initiative developed by China against the backdrop of a new global economy pattern, "One Belt One Road" breaks through the traditional concept about regional cooperation that focuses on trade and investment facility. It supplies international public goods for Road countries, provides new impetus for the still sluggish global economy, and provides new ideas and Chinese solution to solve the current global trade difficulties and to maintain the position of multilateral trade system. In the five key respects emphasized by "One Belt One Road" strategy including policy co-ordination, facilities connectivity, unimpeded trade, financial integration and people-to-people bonds, financial integration lends important support to "One Belt One Road" construction, which is vital to the success of the policy.

 

Firstly, financial integration is of systematic importance

 

In the five key respects emphasized by "One Belt One Road" policy including policy co-ordination, facilities connectivity, unimpeded trade, financial integration and people-to-people bonds, financial integration is of systematic importance. The establishment of efficient and smooth network of financial integration is essential to the success of "One Belt One Road" strategy.

 

In a word, financial integration is inextricably linked with policy co-ordination, facilities connectivity, unimpeded trade, and people-to-people bonds.

 

First of all, financial integration is the basis for realizing facilities connectivity. The initial stage of "One Belt One Road" strategy gave priority to facilities connectivity and established the basic framework of Asian infrastructure connectivity backed by the transportation channels and the economic corridors. Focusing on infrastructures such as transportation, electricity, communications and other projects conducive to the improvement of people's living standard along the Silk Road, "One Belt One Road" strategy has carried out a series of key projects. According to comparative advantage in the natural resources and labor costs in different Road countries, "One Belt One Road" strategy promotes the construction of international transportation and  accelerates the development of high-speed railways to complement for the geographic disadvantage of some inland countries. Construction of traffic network propels the solid growth of infrastructure investment along the Silk Road and results in a large funding gap.

 

Secondly, the unimpeded trade brings forward higher demand for financial integration. The construction of transportation infrastructure has promoted the exploitation and utilization of resources and energy, which further promotes the all-round trade and service contacts along the Silk Road, and continuously strengthens investment and trade cooperation in the region. It is estimated that China's trade with the Road countries will increase by more than 10% per annum over the next ten years, and bilateral trade will reach nearly US$3 trillion, accounting for one third of China's total foreign trade. Financial integration plays an important role in facilitating investment and trade, eliminating investment and trade barriers, and actively building free trade zones with Road countries.

 

Thirdly, financial integration is closely related to policy co-ordination. Road countries encounter policy incompatibility, geopolitical risk, cultural and religious conflict, terrorism and other risk factors in varying degrees. Therefore, policy co-ordination helps to build the Silk Road into a road of peace. To promote political mutual trust and reach a new consensus of cooperation, collaboration among governments and multi-level communication mechanism of macro policies are needed. Commercial organizations also need to strengthen communications and negotiations when participating in the construction of Silk Road to realize their function as cooperation platform.

 

Finally, People-to-people bond is the motivation for "One Belt One Road" strategy. Only by strengthening cultural exchanges can the Silk Road countries develop through economic cooperation, and build a solid public and social foundation. At present, great diversity exists in some Road countries and thus greater efforts should be made in these countries.

 

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Content provided by Bank of China (Hong Kong)
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