Saturday, July 9, 2016

‘Belt and Road’ initiative must work on sustainability of projects by Liu Zongyi

From the Global Times 2016-06-26

The "Belt and Road" (B&R) initiative is the top-level design of China's opening-up and economic diplomacy in the new era. In China, it's a domestic development strategy aimed at poverty reduction and the development of central and western regions; but for the rest of the world, it's an open and inclusive initiative, sharing common ideas and a goal with the 2030 Agenda for Sustainable Development. Infrastructure construction is one of the core contents of the initiative, and also one of UN Sustainable Development Goals and the goals of the G20. When we talk about sustainable infrastructure development, in general we always think of ecological and social sustainability. But in fact, we need more conditions to achieve sustainable infrastructure development. The advancement of the B&R initiative will promote regional economic integration and bring prosperity. But it's evident that it faces instability that includes terrorism and geopolitical suspicion. Thus, for the B&R intiative, sustainable infrastructure development needs sustainable international and regional peace and stability, and sustainable regional economic cooperation. To realize and maintain regional peace and stability, G20 countries should coordinate and cooperate. Meanwhile, China hopes to synergize different countries or regional development plans along the belt and road. G20 countries should promote coordination and cooperation and set up common infrastructure standards to improve infrastructure construction and investment. Countries that receive B&R investment should be politically stable and capable of governing, which is one of the reasons that East Asian countries enjoyed fast economic growth and a large amount of FDI in the past decades. And they should have stable, sustainable and clear development policies that make foreign investors feel at ease. As for ecological and social sustainability, countries along the belt and road can enact laws and regulations according to international norms and their own reality, and ask foreign investors to abide. Ecological and social assessment can be undertaken by a third party. But the country should not break contracts for political reasons, and investors should enjoy the right to defend the safety of investment through international investment dispute settlement mechanisms. Now some international organizations are thwarting B&R infrastructure projects by using so-called ecological and social problems. The G20 should coordinate domestic investment policies of its members and set up a model for other countries. The sustainability of financial support is key. It can be divided into two sides: First, it's necessary to get various and sufficient financial support for infrastructure construction; second, the budget sustainability of the investment receptor, which means FDI should enter countries progressively but not instantly.
But how to get various financial support?
The government should play the leading role, adopting smart financing methods and enhancing public-private cooperation. The Asian Infrastructure Investment Bank (AIIB) and New Development Bank (NDB) can provide finance to B&R projects. All the members of the G20 should accept AIIB and NDB as a part of multilateral development network and stable resources of finance and knowhow similar to the World Bank and the Asian Development Bank. Lastly, the sustainability of infrastructure planning and design is also vital. The parties concerned should adopt a hollistic approach to solving bottle-neck infrastructure problems. The planning and design of infrastructure should carry out an integrative design according to local natural characteristics to achieve the construction of low-carbon infrastructure, ecological preservation and transportation links. To seek balance between short-term and long-term economic achievements, we should not only promote the service efficiency and utilization efficiency of infrastructure, but also keep in mind the development of the next decades, reserving spaces for necessary infrastructure upgrading. This requires us to deal with the contradiction between the short-term political tenure and long-term national development goals.