BEIJING : China is considering more avenues to invest in Pakistan and otherregional countries under the Belt and Road Initiative (BRI), officials saidhere on Sunday.
“We are seeking to bring various financial institutions, internationalenterprises and funding sources together to get projects rolling ineconomies involved in the Belt and Road Initiative,” said senior executivesat Standard Chartered Bank.
“The National Development and Reform Commission has sent a clear messagethat China hopes outbound investments in Belt and Road projects will becommercialized, rather than having only Chinese companies and domesticpolicy banks involved and relying solely on money and manpower from China,”said Jean Lu, head of Global Banking at Standard Chartered China.
“We are willing to cooperate and share our resources with other financialinstitutions to ensure they are able to provide one-stop financial servicesto their clients,” Lu said at a recent media briefing.
For the past eight to 10 years, investors have seen the entry of Chinesecompanies in the Middle East, North Africa and Pakistan in the mostremarkable way. Today, Chinese companies and banks are playing an importantrole across the entire value chain in each country in the region, saidSarmad Lone, co-head of Global Banking, Africa and the Middle East, atStandard Chartered.
“When greenfield industries start to set up (in this region), they willperhaps rely more on the support of their parent entities and Chinesebanks. But the normal evolution curve says once the business has been setup, the capital expenditure is behind them, and regular business activitieshave started in the domestic economy, they will perhaps still use Chinesebanks, but more so the local and international banks,” Lone said.
On a conservative calculation, the infrastructure gap that needs to befinanced in Africa is around $95 billion a year, according to Saif Malik,co-head of Global Banking, Africa and the Middle East, at StandardChartered.
“The Belt and Road Initiative fits well into that need, not just on thetraditional belt, which is on the east coast of Africa. The Chineseinvestment has touched many other parts of sub-Saharan Africa,” Malik said.
Standard Chartered has fully fledged branches in 15 markets in sub-SaharanAfrica. In the majority of those markets, the bank has been operating formore than 100 years, he noted.
The Belt and Road Initiative has led to a strengthening of tradingrelationships that China has with Egypt and countries on the east coast ofAfrica, said Razia Khan, the bank’s chief economist for Africa and theMiddle East.
In 2005, total aggregate trade between China and Africa had grown tenfoldfrom the mid-1990s to about $40 billion. At the peak of the cycle in 2014,when commodity prices were still strong, China-Africa trade increased toaround $220 billion. Since then, commodity prices have corrected, but Khansaid she expects that with the stabilization of commodity prices,China-Africa trade will continue to grow strongly.
Since the downturn in commodity prices, the ranking of the top tradingpartners for China in Africa has changed. The top trading partners used tobe those selling a lot of commodities to China. Now, those importing a lotfrom China are increasingly dominating the ranking list, she noted.
“Perhaps this demonstrates that in China, the views of Africa should notjust be this is a commodity rich region and a place from where China canbuy the commodities it needs. Increasingly, as African economies grow, andas their middle-income group is swelling, they will be the source ofconsiderably more demand from China than has been the case to date,” shesaid.