China’s Xi promotes building initiative amid debt worries

A waiter prepares for lunch next to model high speed trains and screens live broadcasting Chinese President Xi Jinping opening the Second Belt and Road Forum in Beijing Friday, April 26, 2019. (AP Photo/Ng Han Guan)
Updated 26 April 2019

China’s Xi promotes building initiative amid debt worries

  • Xi says Beijing wants “open, green and clean cooperation” with “zero tolerance for corruption”
  • High costs have prompted complaints some are falling into a “debt trap”

BEIJING: President Xi Jinping has promised to set high standards for China’s Belt and Road infrastructure-building initiative, seeking to dispel complaints the many billion dollars in projects leave developing countries with too much debt.
Xi avoided mentioning debt complaints in a speech opening a forum attended by leaders from some three dozen countries to celebrate his signature foreign initiative. But he said Beijing wants “open, green and clean cooperation” with “zero tolerance for corruption.”
Developing countries welcome the initiative to expand trade by building roads, ports and other facilities across Asia and Africa to Europe. But high costs have prompted complaints some are falling into a “debt trap.”
The United States, Russia, Japan and India also worry Beijing is trying to build a trade and political network centered on China and expand its strategic influence at their expense.
Xi’s government is trying to revive the initiative’s momentum after the number of new projects plunged last year. That came after Chinese officials said state-owned banks would step up scrutiny of borrowers and some governments complained projects do too little for their economies and might give Beijing too much political sway.
Countries including Malaysia and Thailand have canceled or scaled back projects while Ethiopia and others have renegotiated debt repayment.
Xi noted China’s finance ministry on Thursday issued guidelines for assessing debt risks for borrowers. The ministry said those “debt sustainability guidelines” are based on the standards of the International Monetary Fund and other international institutions.
The president tried to allay complaints about lack of economic benefits and political influence, saying Belt and Road is “not an exclusive club” and promotes “common development and prosperity.”
“We need to pursue open, green and clean cooperation,” Xi said. “Everything should be done in a transparent way and we should have zero tolerance for corruption.”
His audience at a Beijing conference center included Prime Ministers Aung San Suu Kyi of Myanmar, Lee Hsien-Loong of Singapore and Adiy Ahmed of Ethiopia and leaders or envoys from Greece, Serbia and Malaysia.
Xi said Beijing also wants to expand the scope of its initiative by encouraging cooperation among Belt and Road countries on health, water resources, agriculture and science and technology. He promised to fund scholarships for students from Belt and Road countries.


Virus pressure tests Saudi Arabia reforms as Aramco has Forbes debut

Updated 28 May 2020

Virus pressure tests Saudi Arabia reforms as Aramco has Forbes debut

  • ‘In terms of profits, the Saudi companies have done well. We will see more companies rising in the next few years

RIYADH: Saudi companies such as oil giant Aramco are displaying resilience in the face of the coronavirus pandemic because of reforms introduced before its arrival, say analysts.

The world’s largest oil company has become emblematic of wider corporate reforms triggered by the Saudi Vision 2030 blueprint for social and economic change.

Saudi Aramco this month appeared in the top five of the Forbes Global 2000 list, which ranks the world’s 2000 largest companies.

It comes as the world’s most profitable company reported profits on $88.2 billion last year.

This year’s rankings arrive amid a global pandemic which has devastated the earnings of some companies, improved the position of others and tested the resilience of all.

It has also shone a spotlight on the ability of the the Kingdom’s top companies to withstand the twin shock of the COVID-19 lockdown and the collapse of oil prices.

Saudi Aramco debuted on the prestigious Forbes list after completing the world’s largest initial public offering last year.

The rankings are based on a combination of sales, profits, market capitalization and assets. Three of the top five companies on the list are from China, including Industrial and Commercial Bank of China in the top spot for the eighth straight year with more than $4.3 trillion in assets.

Forbes noted that many of the companies on its list have come through a particularly difficult first quarter as a result of the COVID-19 pandemic, or what it describes as “The Great Cessation.”

“Many companies and organizations have faced difficulties in managing and mitigating the impact of COVID-19 crisis. However, there are some companies that have prepared well and put in action plans to avoid this crisis with the least damage,” said Fahad Alfaifi, a Saudi-based strategy and business planning consultant.

The pandemic has come at a time of historic change in the Kingdom’s corporate landscape driven by economic reforms which form a major part of the Vision 2030 agenda. This aims to reduce the country’s reliance on oil revenues and stimulate investment in sectors of the economy that create new jobs for a youthful population.

This backdrop has meant many companies in the Kingdom were already changing the way they did business before the arrival of the pandemic and the collapse of oil prices created new challenges.

Last year’s annual Global Competitiveness Report, issued by the World Economic Forum, placed the Kingdom third among G20 counties and 11th globally

in terms of IT governance which rates a country’s ability to adapt digital technologies such as e-commerce and financial technology.

Such technology skills are becoming increasingly important for economies as they to re-calibrate and adapt to the post-pandemic world.

Nasser Al-Qarawee, the director of the Saudi Study and Research Center, attributed the success of some Saudi companies to the great achievements made by the private sector lately and predicted that more Saudi companies would eventually join Aramco on the Forbes list.

“The national economy has seen enormous improvements and development in terms of laws and legislation that have helped reduce restrictions and bureaucracy, while the government has worked at the same time on reducing dependency on oil. Vision 2030 will further cement the Kingdom’s strong presence globally and make it have a larger influence on global decisions, not only economically but also politically.”

Tawfiq Al-Swailem, CEO of the Gulf Bureau for Research and Economic Consultations, said that many Saudi companies would emerge from the pandemic in a strong position.

“In terms of profits, the Saudi companies have done well, although the entire world is living through a state of ferocious economic war,” he said. “We will see more Saudi companies rising in the next few years.”