MNI POLICY: China Seeks To Minimize Belt and Road Debt Risks

     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

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