In nod to debt concerns, China Belt and Road summit to urge sustainable financing

Wang Yi, China’s top diplomat, has said the Belt and Road project is not a ‘geopolitical tool’. (AFP)
Updated 21 April 2019
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In nod to debt concerns, China Belt and Road summit to urge sustainable financing

  • The Belt and Road Initiative envisions rebuilding the old Silk Road to connect China with Asia, Europe and beyond
  • But the initiative has proved controversial in many Western capitals, particularly Washington

SHANGHAI: World leaders meeting in Beijing this week for a summit on China’s Belt and Road initiative will agree to project financing that respects global debt goals and promotes green growth, according to a draft communique seen by Reuters.
The Belt and Road Initiative is a key policy of President Xi Jinping and envisions rebuilding the old Silk Road to connect China with Asia, Europe and beyond with massive infrastructure spending.
But it has proved controversial in many Western capitals, particularly Washington, which views it as merely a means to spread Chinese influence abroad and saddle countries with unsustainable debt through nontransparent projects.
The United States has been particularly critical of Italy’s decision to sign up to the plan last month, the first for a G7 nation.
In an apparent nod to these concerns, the communique reiterates promises reached at the last summit in 2017 for sustainable financing — but adds a line on debt, which was not included the last time.
“We support collaboration among national and international financial institutions to provide diversified and sustainable financial supports for projects,” the draft communique reads.
“We encourage local currency financing, mutual establishment of financial institutions, and a greater role of development finance in line with respective national priorities, laws, regulations and international commitments, and the agreed principles by the UNGA on debt sustainability,” it added, referring to the United Nations General Assembly.
The word “green” appears in the draft seven times. It was not mentioned once in the summit communique from two years ago.
“We underline the importance of promoting green development,” the draft reads. “We encourage the development of green finance including the issuance of green bonds as well as development of green technology.”
The Chinese government’s top diplomat, Wang Yi, said on Friday that the Belt and Road project is not a “geopolitical tool” or a debt crisis for participating nations, but Beijing welcomes constructive suggestions on how to address concerns over the initiative.
A total of 37 foreign leaders are due to attend the April 25-27 summit, though the United States is only sending lower-level representatives, reflecting its unease over the scheme.
The number of foreign leaders at the April 25-27 summit is up from 29 last time, mainly from China’s closest allies like Pakistan and Russia but also Italy, Switzerland and Austria.
China has repeatedly said Belt and Road is for the benefit of the whole world, and that it is committed to upholding globally accepted norms in ensuring projects are transparent and win-win for all parties.
“We emphasize the importance of the rule of law and equal opportunities for all,” the draft reads.


Oil bounces back, but markets remain fragile amid trade disputes

Updated 14 min 4 sec ago
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Oil bounces back, but markets remain fragile amid trade disputes

  • OPEC has led supply cuts since the start of the year aimed at tightening the market and propping up prices
  • US sanctions on Iran’s and Venezuela’s oil industries would likely further reduce crude exports from OPEC

SINGAPORE: Oil prices jumped more than 1 percent on Friday amid OPEC supply cuts and Middle East tensions, but still did not fully recoup losses earlier in the week on economic slowdown jitters and swelling inventories — their steepest drops since the start of the year.
Brent crude futures, the international benchmark for oil prices, were at $68.50 per barrel at 0231 GMT, up 74 cents, or 1.1 percent, from their last close.
US West Texas Intermediate (WTI) crude futures were up 63 cents, or 1.1 percent, at $58.54 per barrel.
“Multiple supply risks remain, as tension continues between Iran and the US, which could turn disruptive,” ANZ bank said on Friday.
The Organization of the Petroleum Exporting Countries (OPEC) has led supply cuts since the start of the year aimed at tightening the market and propping up prices.
ANZ said US sanctions on Iran’s and Venezuela’s oil industries would likely further reduce crude exports from OPEC, of which both countries are members.
But Friday’s firmer prices could not make up the much bigger slumps from earlier in the week, which have put crude futures on track for their biggest weekly losses this year.
From mid-week, rising oil inventories in the United States started weighing on prices.
“Increasing (oil) inventories and slumping US manufacturing activity exacerbated trade related concerns about global demand,” Michael McCarthy, chief market strategist at CMC Markets in Australia, said in a note, pulling WTI below $60 per barrel and Brent below $70 per barrel.
And the glut has spread beyond North America. Struggling to cope with oversupply from fuels, Asian refinery margins this week fell to their lowest seasonal levels since the financial crisis a decade ago, triggering plans for refinery run cuts.
“In China, gasoline stockpiles at seaports were seen rising to a multi-year high, this can shrink the margins for refiners and lead to softer oil demand from China,” ANZ bank said on Friday.
“Oil remains acutely vulnerable to any trade headlines, and with Asian currencies and stocks most likely to be dragged lower, any rallies may be short-lived,” said Jeffrey Halley, senior analyst at futures brokerage OANDA.
Asian shares were hobbled near four-month lows on Friday on worries the US-China trade spat was developing into a more entrenched strategic dispute between the world’s two largest economies.