At the Thematic Forum on Financial Connectivity this morning, government officials from many countries, as well as the heads of international organizations and financial institutions, had in-depth and extensive exchanges on financing in the Belt and Road Initiative, and there was a warm atmosphere and great interactions. What do you think of this subforum?
Close to six years since it was first put forth by President Xi Jinping, the Belt and Road Initiative (BRI) has become a widely-welcomed international public goods, with a far-reaching and profound impact on the world. Financial connectivity is an important underpinning for the development of the BRI, and this subforum has been held to strengthen exchanges among governments, international organizations, financial institutions, enterprises and think tanks in order to promote sustainable financing and facilitate the high-quality development of the BRI. With the active support and participation of all parties, today's subforum has generally achieved the anticipated goals. To sum up, it had the following features:
Firstly, it had extensive participation and was highly representative. The subforum received widespread attention and active participation from all walks of life, with more than 260 participants from nearly 50 countries. The high-level participants and speakers included senior government officials such as finance ministers and central bank governors from more than 20 countries, the heads of international organizations such as the World Bank, the International Monetary Fund, the Asian Infrastructure Investment Bank and the New Development Bank, senior executives of policy and development financial institutions and large commercial banks, as well as representatives of enterprises and think tanks. It’s safe to say that the subforum had representatives from both developed and developing economies, from both the public sector and the private sector, and from both the demand and supply side of the capital market. This made the voices of all parties heard in a more comprehensive manner, and also reflected the BRI's nature of open cooperation as well as its spirit of “extensive consultation, joint contribution, and shared benefits.”
Secondly, pragmatic topics with in-depth and fruitful discussions. The subforum’s theme was "Promoting sustainable financing, building an open and market-oriented investment and financing system, and promoting the high-quality development of the Belt and Road Initiative," which directly responded to key financing challenges. Representatives of governments, international organizations, financial institutions and enterprises actively contributed their views and suggestions, sharing their experiences of BRI financing practices over the past few years, providing in-depth analyses of challenges and opportunities in sustainable financing, and putting forward many constructive suggestions. The discussions centered on key concepts in cooperation, such as sustainability, openness, market-orientation and high-quality development, and also reviewed how solutions might work in practice. Such efforts will certainly facilitate the transition of "high-quality" and "high standards" from concepts to reality.
Thirdly, fruitful results and new space for practical financing cooperation. A number of pragmatic results were achieved during the subforum. First, issuance of the Debt Sustainability Framework for Participating Countries of the Belt and Road Initiative. Second, establishment of Multilateral Cooperation Center for Development Finance (hereinafter referred to as MCDF) with eight multilateral development institutions, including the Asian Infrastructure Investment Bank, the Asian Development Bank and the World Bank Group. Third, issuance of the Initiative on Promoting Accounting Standards Cooperation among Participating Countries of the BRI together with the accounting standards-setting bodies of nine countries including Laos, Mongolia and Nepal. Fourth, strengthen cross-border accounting and audit regulatory cooperation with Japan and Malaysia. Fifth, the China-Central Asia Accounting Elites Exchange Program was launched. In addition, domestic financial institutions have also signed a series of project financing and cooperation agreements with institutions in relevant countries. These pragmatic results fully demonstrate the significant cooperation opportunities and strong willingness of all parties to cooperate in the area of financial connectivity. They also show the rising international influence and attractiveness of the BRI.
During the subforum, China released the Debt Sustainability Framework for Participating Countries of the Belt and Road Initiative. Can you please tell what role the framework can play in promoting the Belt and Road Initiative?
In recent years, debt sustainability has received extensive attention from the international community. While providing financial support for the BRI together with relevant international institutions and countries, China has attached great importance to debt sustainability and taken a number of policy measures to promote sustainable financing and the BRI’s high-quality development, including promoting the endorsement of the Guiding Principles on Financing the Development of the Belt and Road by the finance ministries of 28 countries. During the subforum, the Ministry of Finance released the Debt Sustainability Framework for Participating Countries of the Belt and Road Initiative (hereinafter referred to as BRI-DSF) with an aim to serve as a debt management tool for participating countries of the BRI for usage on a voluntary basis. Overall, the framework is important on three fronts.
Firstly, it demonstrates China's positive and constructive attitude towards the debt sustainability issue. During the drafting process of the framework, we had full communication with the IMF, proceeded on the basis of the IMF/World Bank Debt Sustainability Framework for Low Income Countries (hereinafter referred to as LIC-DSF), and reinterpreted the issue of debt sustainability from a new perspective, which also won the understanding and recognition of the IMF. This is a major step taken by China to promote debt sustainability. The BRI-DSF adopts the internationally accepted analytical framework and also takes into account the actual situation in terms of infrastructure connectivity.
Secondly, the BRI-DSF reflects China's concern for the actual conditions and development needs of low-income countries participating in the BRI. Compared with the LIC-DSF, the BRI-DSF emphasizes a development perspective in approaching debt sustainability while attaching importance to risk. It also takes full account of the positive role of investment in driving medium and long-term economic growth as well as the role of economic development in reducing debt levels, and upholds a dynamic control of debt risks in the process of promoting economic development.
Thirdly, the BRI-DSF helps both creditors and debtors to better manage investment risks. The BRI-DSF helps predict future debt risks and the new borrowing of a country, helps financing institutions to make more accurate judgment on the overall risks of the country concerned, and makeinvestment and financing decisions more scientific. It also provides an analytical framework for debtor countries to implement prudent debt management.
The Ministry of Finance and other multilateral development agencies jointly launched the MCDF. How will MCDFpromote the BRI?
The MCDF was established at the proposal of President Xi Jinping at the first Belt and Road Forum for International Cooperation, serving an institutional arrangement as the MoU on BRI cooperation signed between China and multilateral development banks.
In March this year, Ministry of Finance of China, the Asian Infrastructure Investment Bank, the Asian Development Bank, the Development Bank of Latin America, the European Bank for Reconstruction and Development, the European Investment Bank, the Inter-American Development Bank, the International Fund for Agricultural Development and the World Bank Group signed the MoU on Collaboration on Matters to Establish the Multilateral Cooperation Center for Development Finance in Beijing, marking the official establishment of the MCDF.
As a coordination mechanism for multilateral cooperation in infrastructure development and financing, the MCDF is committed to comply with high standards. It promotes information sharing, project preparation and capacity building through multilateral development cooperation, coordinates cooperation between multilateral and bilateral development agencies in such areas as infrastructure and connectivity, and supports the building of a long-term, stable and sustainable financing system that is well-placed to manage risks.
Countries participating in the BRI have achieved fruitful results in accounting standards cooperation. How will this cooperation promote the BRI?
To promote BRI development, Ministry of Finance, China and the accounting standards-setting bodies of nine countries - namely Laos, Mongolia, Nepal, New Zealand, Pakistan, Russia, Saudi Arabia, Syria and Vietnam - jointly launched the Initiative on Promoting Accounting Standards Cooperation among Participating Countries of the BRI. This marked the first time that participating countries of the BRI launched such an initiative for accounting standards cooperation, which will play an important role in facilitating the BRI’s high-quality development.
Firstly, it adheres to the principles of “extensive consultation, joint contribution, and shared benefits,” with the voluntary participation of the accounting standards-setting bodies. This will promote experience sharing, information exchange, mutual understanding and consensus buildingamong participating countries of the BRI in the area of accounting standards, and lay a good foundation for deepening cooperation among all parties in the future.
Secondly, it provides a platform for exchanges and cooperation in the areas of accounting standards development and international integration, and facilitates financial and trade connectivity through policy communications consistent with the characteristics of the BRI.
Thirdly, it is a practical support to establish a high-quality, internationally recognized set of accounting standards, a useful exploration of the broad application of the International Financial Reporting Standards, and an effort to promote BRI’s high-quality development through improving institutional arrangements.
Can you give a brief introduction to the progress in accounting and audit regulatory cooperation between China and participating countries of the BRI?
In recent years, in order to enhance the interconnection of financial infrastructure in the participating countries of the BRI and boost their financial connectivity, the Ministry of Finance, China has actively strengthened cross-border accounting and audit regulatory cooperation with authorities in countries and regions of the BRI. In 2017 and 2018, China signed bilateral cooperation agreements on accounting and audit supervision with agencies in Japan and Malaysia, promoting information sharing and cooperation and facilitating regulation of cross-border investment and financing activities by financial institutions and enterprises.
In order to deepen economic and trade exchanges and financial cooperation and share the opportunities of development in the BRI, China welcomes and supports financial institutions and enterprises in participating countries of the BRI to issue panda bonds in China, and is willing to expand and deepen exchanges and cooperation with the regulatory authorities of various countries on the principles of respect for sovereignty, equality and mutual benefit. China also works with relevant countries to actively promote pragmatic and flexible cooperation arrangements on accounting and the audit regulation of bond issuance, so as to promote the interconnection of financial infrastructure and safeguard the principles of “extensive consultation, joint contribution, and shared benefits.”
The China-Central Asia Accounting Elites Exchange Program is another important result of accounting cooperation. Can you please introduce the program’s content and significance?
The Shanghai National Accounting Institute affiliated with the Ministry of Finance of China, together with the CAREC Institute, the Asian Development Bank and the Association of Chartered Certified Accountants, has jointly launched the China-Central Asia Accounting Elites Exchange Program. The program mainly serves governmental offices from accounting agencies in China and Central Asian countries, professionals from enterprises, industrial associations, accounting firms, and experts in theory studies or practice. Through regular seminars, visits, exchanges and other activities, the program will focus on in-depth discussions and exchanges on a broad range of topics, such as development of accounting systems, accounting talent training, accounting regulatory systems, accounting services, technical innovation and accounting development.
The program is of significance to further consolidate the accounting foundation jointly developed by China and Central Asian countries and promote exchanges in accounting-related fields. On the one hand, it will promote the sharing of experience in developing accounting infrastructure between China and the Central Asian countries and help countries with weak accounting infrastructure realize 'leapfrog' improvements to their accounting systems. On the other hand, the program can help promote the exchange of accounting talents between the countries, to establish a cross-border talent network and strengthen coordination of accounting regulations in those countries, preventing accounting risks. Meanwhile, the program will actively facilitate the convergence or equivalence of accounting standards among relevant countries, reducing cross-border transaction costs, and further strengthening connectivity and cooperation in policies, rules and standards under the BRI.