The China-led ‘one belt, one road’ trade and infrastructure investment initiative is facing a pivotal year as responsibility falls on Asia to drive global growth, and Hong Kong will be a key fundraising hub for the scheme, a summit heard yesterday.
Liu Zhenmin, China’s vice-minister of foreign affairs, and CY Leung, Hong Kong's chief executive, talked up the need for regional cooperation at the Asian Financial Forum, pointing to bright private and public investment opportunities offered by the project, despite a gloomy economic backdrop.
Leung said the scheme had “strikingly ambitious goals”, with the promise of policy coordination, infrastructure connectivity, unimpeded trade and investment and deepening financial integration. He highlighted a massive expansion of transport and logistical networks across the economies in question, which span Asia, Africa, the Middle East and Europe.
“This connectivity will boost economic development through Eurasia, enhancing the competitiveness of the entire region,” Leung noted. “Development on this scale demands equally outsized financial resources from both public and private sectors.”
In terms of funding for the scheme, the Asia Infrastructure Investment Bank (AIIB) – some 60% of whose founding members are Asian countries – started operating on January 16. Moreover, the $40 billion Silk Road fund has also been set up.
Leung also pointed to Hong Kong’s own credentials as a fundraising hub, in areas from initial public offerings to loan syndications, and private equity funds to Islamic finance. “You are welcome to join us in financing belt-and-road projects,” he told the assembled international audience.
“Hong Kong can help to satisfy rising demand for infrastructure investment as well as the expected increase in global trade and funds,” he noted.
Leung also highlighted the city’s role as the world’s major offshore RMB hub, with banks there now handling 70% of global renminbi payments. “The RMB’s importance in the global economy will only continue to increase,” he said. “Whatever the currency, money likes Hong Kong, and the feeling is mutual.”
He added that the special administrative region (SAR) would work to strengthen its financial market infrastructure, boost its talent pool and diversify its RMB product offering.
Liu, too, emphasised Hong Kong’s important role in the initiative, describing the city as an international financial hub and the world’s largest offshore renminbi centre. He said Hong Kong was geographically well positioned, with a sound financial and legal system and a familiarity with international rules.
“For [the] SAR, there are huge opportunities,” Liu explained. “There is room for further cooperation. [One belt, one road] will be beneficial for the long-term prosperity and stability of Hong Kong.”
Moreover, the scheme "will be a new driving force to encourage growth for the whole region", he said. Through the scheme China wanted to promote regional stability via greater coordination in macro policy, he noted. “This is a critical year for the implementation of ‘one belt, one road’ and a very important year for East Asia cooperation.”
Liu said China was confident in being able to maintain a mid-to-high-growth rate for its economy, but that Asian nations needed to work together. “We share the same goals and objectives as neighbouring countries,” he added.
What China was interested in, Liu noted, was promoting balancing growth in trade and an interchange of talent, with investment coming from the AIIB and Silk Road fund.