South China Morning Post reported (April 14, 2018) that while speaking at a forum in Guangzhou on April 13, 2018, Li Ruogu, the former president of Export-Import Bank of China, said that most of the countries along the route of the “Belt and Road Initiative”, as the plan is known, did not have the money to pay for the projects with which they were involved. He added that the countries’ average liability and debt ratios had reached 35 and 126 per cent, respectively, far above the globally recognised warning lines of 20 and 100 per cent. He said “It would be a tremendous task to raise funds for the countries’ development.” China’s new central bank chief Yi Gang said that Beijing was keen to work with international organisations, commercial lenders, and financial centres like Hong Kong and London to diversify funding sources for the plan. Wang Yiming, deputy head of the Development Research Centre of China’s State Council, said at the forum that although many belt and road projects were funded by major financial institutions – including the Asian Infrastructure Investment Bank, New Development Bank, China Development Bank (CDB), the Export-Import Bank of China and the Silk Road Fund – there was still a huge funding gap of up to US$500 billion a year. Wang Yiming said the limited participation of private investors, narrow financing channels and low profitability levels were major problems and that “It is important to encourage financial innovation to raise funds to support the development of the belt and road.” He called for the creation of an international fundraising mechanism to attract private investors. Liu Yong, chief economist at CDB – the nation’s main policy lender – said the bank always considered the medium to long-term risks faced by Chinese companies involved in belt and road projects. While there were “non-performing asset problems” with some schemes, they were “within our tolerance range”, he said.
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