China Pledges to Build `Open' Financing System for Belt and Road

(Bloomberg) -- Chinese officials pledged to improve funding arrangements for projects along its Belt and Road infrastructure network, in response to criticism that the initiative saddles developing countries with loans they can’t repay.

The People’s Bank of China will “build an open, market-oriented financing and investment system,” PBOC Governor Yi Gang said in brief remarks at the second Belt and Road Forum for International Cooperation in Beijing Thursday.

Yi’s comments followed similar remarks by Finance Minister Liu Kun, and fit into a new effort by Beijing to polish the image of President Xi Jinping’s signature foreign policy amid sustained allegations that it’s a debt-fueled push to enhance China’s leverage over its neighbors. The initiative is getting a makeover, with the government toning down rhetoric and tightening oversight.

The Ministry of Finance will work with counterparts in other countries to build a “high quality, high-standard,” financing system for Belt and Road which will be market-oriented, Liu said Thursday. The government will release its analysis framework for debt-sustainability later Thursday, he said.

Chinese financial institutions have provided more than $440 billion for Belt and Road construction, Yi said.

“Government funding will be mainly to leverage capital from the private sector, meaning that private sector financing will be the main force while government funding will only play a guiding role, a leverage role,” he said.

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