Contents on this page
- World Bank President Jim Yong Kim remarks at the Belt and Road Forum for International Cooperation – Opening Plenary Session
- IMF: Belt and Road Initiative to create stronger financial connections and more prosperous economies—in Asia and around the world
- WTO DG Azevêdo addresses forum at the High-level Dialogue held in Beijing
May 14, 2017
Remarks of World Bank Group President Jim Yong Kim at the Belt and Road Forum for International Cooperation – Opening Plenary Session
Belt and Road Forum for International Cooperation – Opening Plenary Session
Three years ago, President Xi Jinping told the members of APEC,
Asian countries are just like a cluster of bright lanterns.
Only when we link them together, can we light up the night sky in our continent.
As someone who was born in Korea, I’m inspired by the Belt and Road Initiative.
And the World Bank Group very proudly supports the Government of China’s ambitious, unprecedented effort to light up that night sky. The Belt and Road will improve trade, infrastructure, investment, and people-to-people connectivity – not just across borders, but on a trans-continental scale.
Building on ancient trade routes that were commercial highways during the Mongol Empire; and sea routes that Admiral Zheng He sailed to Africa and the Middle East in the 15th century – the Belt and Road will link China with 64 countries that collectively account for 62 percent of the world’s population and 30 percent of global GDP.
The Belt and Road Initiative has potential to lower trade costs, increase competitiveness, improve infrastructure, and provide greater connectivity for Asia and its neighboring regions.
But realizing the promise of this Initiative will require appropriate policies, institutions, and services, such as:
- Effective governance, which is critical to ensuring developmental impact;
- Careful attention to conditions “at the border” – like customs procedures – and regulations beyond the border – like non-tariff measures;
- Access to ancillary services for efficient supply chains – like transportation, financing, insurance, and telecommunications. The markets for these services are uneven across the Belt and Road countries, so reforms like national regulatory policies will be needed.
The World Bank Group is dedicated to the development of countries along the Belt and Road.
We have ongoing commitments of 86.8 billion dollars in numerous infrastructure, trade, power, and connectivity projects in those countries.
In transportation alone, we have commitments of 24 billion dollars. We’re financing projects like Afghanistan’s Trans-Hindukush Road Connectivity, Kazakhstan’s East-West Roads, Pakistan’s Karachi Ports, and Uzbekistan’s Pap-Angren Railway that are already reinforcing connections along the Belt and Road.
IFC, our private sector arm, is partnering with the Silk Road Fund and China’s Three Gorges Company to develop Hydropower in Pakistan, and we’re working with China’s Exim Bank, CIC, and others to develop infrastructure. And we also supported an estimated 12.9 billion dollars in trade through global short-term finance programs.
And MIGA, our insurance arm that specializes in political risk insurance and credit enhancement, has provided 1 billion dollars in guarantees, which has facilitated 1.8 billion dollars of investment along the Belt and Road.
But to ensure the Belt and Road Initiative’s success, we need to remember that –
- First, because of the Initiative’s sheer size, the estimated investment needs will be large.
- Second, individual countries are at different stages of development, with varying capabilities, constraints, and risk profiles. They will need support mechanisms to define and meet consistent, satisfactory standards.
- Third, the benefits of the Belt and Road Initiative are broader than one project or one country. Projects will require innovative financing mechanisms – a mix of public and concessional finance and commercial capital.
- Finally, our decades of experience with large infrastructure projects suggest that project preparation and appropriate risk allocation will be critical for success.
We’re ready to work on all of these issues with countries along the Belt and Road to overcome these challenges. At the invitation of China’s Ministry of Finance, we’re signing an MOU with other multilateral development banks to support the Belt and Road. President Xi spoke about win-win situations. Some of the best win-win situations can come from crowing in private capital. Right now, there’s 8.5 trillion dollars sitting in cash, waiting for better investment opportunities.
Happily, we’re proud to announce that we’ve already begun working on the Belt and Road Initiative:
- With the support of China’s Ministry of Finance, we’re studying the economics of the Belt and Road Initiative to quantify the potential benefits, identify critical infrastructure bottlenecks, and suggest solutions for policy and regulatory constraints.
- In partnership with China, other countries, and multilateral development banks, we’ve initiated the Global Infrastructure Facility and the Global Connectivity Alliance to provide project preparation funds, and transaction structure advice to help accelerate project readiness.
Over the last five years, I’ve traveled to many of the countries along the Belt and Road. And I’ve seen how technology and connectivity is helping raise aspirations. The Belt and Road Initiative can be a catalyst for A NEW APPROACH to development, where we crowd in private capital to meet people’s rising aspirations.
The three arms of the World Bank Group – the World Bank, IFC, and MIGA – can provide a unique combination of tools and expertise to leverage public and private financing and invest in countries along the Belt and Road.
We’re ready to help make the promise of the Belt and Road Initiative a reality.
Source: World Bank
May 14, 2017
IMF: Belt and Road Initiative to create stronger financial connections and more prosperous economies—in Asia and around the world
By Christine Lagarde, IMF Managing Director
Belt and Road Forum, Beijing
Governor Zhou, Minister Xiao, Distinguished Guests, Ladies and Gentlemen—good afternoon!
I would like to thank the People’s Bank of China and the Chinese Ministry of Finance for hosting this important discussion on financial connectivity.
Harnessing the resources of governments, investors, financial institutions, and ordinary citizens requires a financial system that works for all. This objective lies at the heart of the Belt and Road Initiative.
How can governments achieve this common goal? Let me highlight three policy priorities:
First, step up efforts to attract foreign direct investment in high-quality infrastructure. The good news is that there is a large pool of institutional funds—about USD120 trillion in global assets under management. But only a tiny fraction of that is allocated to infrastructure in developing countries, where projects are often seen as too risky.
Last year, emerging and developing countries received net foreign direct investment inflows of less than 1 percent of their combined GDP, down from 2 percent before the 2008 financial crisis. These countries can reinvigorate FDI inflows by pursuing sound macroeconomic policies, by increasing their openness to trade, and by improving their business and regulatory environment.
The second policy priority is to push for more financial inclusion , especially in developing economies. Think of the small businesses that are held back by a lack of credit. And think of the billions of women who have yet to achieve their full economic potential.
By expanding their access to financial services—by sharing the benefits of finance more widely—growth will be stronger, more durable, and more inclusive. Recent IMF analysis shows a 2-to-3 percentage point difference in economic growth between financially inclusive countries and their less inclusive peers.
The third policy priority is to harness the power of financial technology, or fintech . A good example is the rapid growth of mobile banking, which has boosted the economic wellbeing of hundreds of millions of citizens—from Bangladesh, to Kenya, to Peru. Here in China—in cities like Beijing and Hangzhou—people can live without cash by using online payment platform such as Alipay and Wechat.
Another example is the rapid increase in cross-border payments based on virtual currencies. For many companies and households, this is a faster and cheaper way of transferring money overseas.
These benefits are significant—but so are the challenges, including the risk of money laundering and terrorist financing. Fintech providers, financial regulators, central bankers, and international organizations will need to work together to ensure that financial systems are safe and inclusive.
More broadly, IMF analysis shows that having a more inclusive financial system makes it safer—and more beneficial—to relax restrictions on capital flows across borders . By liberalizing their capital account over time, countries can attract more foreign investment, increase the liquidity of local financial markets, and reduce their cost of capital.
In other words, by developing deep, well-regulated financial markets, countries can better mobilize domestic and international resources for investment—while reducing the financial stability risks that come with large capital inflows.
The IMF has shown over many decades that it can help in this effort—by providing policy advice and technical assistance in key areas—from debt sustainability, to macroprudential policy, to managing capital flow volatility in times of distress.
Above all, greater financial integration and connectivity requires stronger international cooperation along the Belt and Road and beyond. As the Chinese proverb goes: “ One chopstick is easy to bend; a bunch of chopsticks are difficult to break .”
By working together, we will have the opportunity to create stronger financial connections and more prosperous economies—in Asia and around the world.
Thank you. Xièxiè.
May 15, 2017
WTO DG Azevêdo addresses forum at the High-level Dialogue held in Beijing
Remarks by DG Azevêdo
Ladies and gentlemen,
I am honoured to join you .
“One Belt One Road” is a historic endeavour. I would like to commend President Xi for his leadership in taking it forward.
This initiative is about boosting trade and connectivity. And we all know how transformative this can be.
In China, for example, trade has been crucial to lifting more than 800 million people out of poverty since market reforms began just under four decades ago. This is a phenomenal achievement, which was built on greater economic openness, and supported by the country’s accession to the WTO in 2001.
Trade has proven to be one of the best anti-poverty and pro-development tools we have. And for trade to continue playing its full part in powering economic transformation, the proper structures must be in place.
Hard infrastructure is essential.
In a recent survey, we asked WTO members what were the biggest sources of trade costs when exporting goods and services. Lack of appropriate transport and network infrastructure were at the top of that list.
“One Belt One Road” projects will be hugely important in responding to this need.
At the same time, we know that hard infrastructure must be supported by the necessary soft infrastructure. This means the rules, regulations and procedures which can expedite the flow of goods and services across borders in an open and efficient way.
The global trading rules under the WTO are essential here. And we have recently delivered a major new reform to ensure that goods can flow even more easily.
The WTO Trade Facilitation Agreement came into force in February this year. It is the biggest global trade deal this century. It will cut the time it takes for goods to cross borders – and will therefore cut trade costs dramatically.
By reducing delays, bureaucracy and the opportunity for corruption, full implementation of the Agreement could reduce trade costs globally by an average of 14.3%. This is a bigger impact than removing every remaining import tariff around the world.
The benefits would be felt most in developing and least developed countries – and, importantly, those countries will also be able to access technical assistance to help to implement the necessary reforms.
This Agreement illustrates why the multilateral trading system is so important, as it delivers these reforms on a huge scale – potentially across 164 WTO members – maximising opportunities for growth and development.
Clearly there are many challenges before us today – with economic growth subdued and the threat of new trade barriers. But, in this context, I believe that global economic cooperation on trade issues is more important than ever. We must work harder to ensure that trade is part of the solution to the challenges we face – and that the benefits of trade reach further and wider.
This means continuing to deliver new reforms to global trade rules.
We know that WTO members can deliver. In addition to the Trade Facilitation Agreement, over the past few years members have also struck deals to expand the Information Technology Agreement, to abolish export subsidies in agriculture trade, and a range of other important steps.
China’s contribution was crucial to reaching each of these agreements – and we are thankful for that.
Members are now discussing what further steps could be taken.
At the end of the year we will hold our Ministerial Conference in Buenos Aires. That could be an important opportunity for progress. I count on China’s leadership in these talks, so that we can continue advancing the cause of cooperation on trade issues.
In my view this is how we will continue to improve both hard and soft infrastructure in the interests of growth and development around the world.