MNI POLICY: China To Gauge Risk On Struggling OBOR Partner Aid

China will help partner countries in the One Belt, One Road initiative struggling through the fiscal fall out of the Covid-19 pandemic while keeping strict control over risks, a former senior regulation official told reporters in a forum held by The Belt and Road Financial Cooperation Research Center.

More than ten countries -- all facing economic downturns and currency depreciation pressure -- have asked for deferred debt repayment or debt reduction plans totaling around USD27 billion, as many overseas projects china is invested in have been suspended due to the pandemic, said Wang Zhaoxing, a senior advisor of the State Council and former deputy-chairman of China Banking and Insurance Commission.

Volatile commodity prices could cause financial difficulties for these countries and impact their liquidity, exchange rate and even the capability to repay debt, he continued. Wang also noted that the uncertainty of the China-U.S. relationship, exchange rate fluctuation for these countries against dollar and the stricter scrutiny of some countries to foreign investment will also hit China's investment,

YUAN USE

China should push harder to increase the yuan's regional use, Wang added, forming a region with the yuan as the central currency, encouraging direct outbound investment in yuan, which will reduce exchange rate cost, he suggested. However, he noted there are opportunities for the financial cooperation under the principle of the dual circulation which will benefit from joining multilateral international framework such as RCEP.