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MNI (London)
     BEIJING (MNI) - Leading Chinese officials have vowed to tame debt risks in
countries which join the Belt and Road initiative, aiming to make its
infrastructure plan more sustainable and head off criticism it could be a "debt
trap" for participating countries.
     The Ministry of Finance will work on establishing a sustainable financing
system, including an analytical framework of debt sustainability aimed at
preventing and resolving debt risks, Finance Minister Liu Kun told the Belt and
Road Forum in Beijing Thursday, officially launching the plan.
     The framework is based on International Monetary Fund and the Work Bank
models, combined with the actual situation of Belt and Road countries, according
to Liu. Chinese financial institutions and international organizations are being
encouraged to use the framework, so as to increase the level of debt management,
Liu added.
     The People's Bank of China will also look to strengthen debt and risk
management, central bank Governor Yi Gang told the same audience.
     "Investment and financing decisions must take one country's debt tolerance
into consideration, and ensure the sustainability of debts," Yi said, adding
that the capital constraints of market entities should also be considered to
help control risks.
     These are other key points from the speeches by Yi and Liu:
     --Both officials said public funds should play a better role in attracting
private investors and guiding private funds. Yi said private investment should
be the main driver, while Liu encouraged private funds to participate though
equity financing and public-private partnership programs.
     --Chinese financial institutions have provided over $440 billion dollars
for Belt and Road projects over the past two year, Yi said. Countries and
enterprises along the Belt and Road initiative have issued over CNY65 billion of
Panda bonds in China, Yi added.
     --The Belt and Road initiative has helped to lower the global trade cost by
1.1% to 2.2%, and it is expected to drive global economic growth this year by
0.1 of a percentage point, said Liu, citing World Bank research.
--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com
[TOPICS: M$A$$$,M$Q$$$,MGQ$$$]
MNI London Bureau | +44 203-865-3812 | les.commons@marketnews.com
MNI London Bureau | +44 203-865-3812 | les.commons@marketnews.com