On May 9, 2023, the “Western Financial Centre International Roundtable Series”, hosted by the Chengdu Municipal Financial Regulation Bureau and organized by the China Innovation Finance Institute, took place simultaneously online in Chengdu and Singapore.
The conference, with the theme “New Trends in Cross-border Investment and Financing: Analysis from the Perspective of China-Arab Cooperation, Transition Finance, and Financial Service Innovation”, commenced with an opening address by Mr. LIANG Qizhou, Director General of Chengdu Municipal Financial Regulatory Bureau. Mr. NIU Xinchun, Director and Research Professor of the Institute of Middle East Studies at the China Institutes of Contemporary International Relations and Vice President of the the Chinese Association of Middle East Studies, Ms. CAO Li, Vice President of BFA Academy, and Mr. Calvin Fu, Chairman of the China Innovation Finance Institute, delivered keynote speeches. Over 20 representatives from collaborating institutions in Chengdu, Beijing, Hong Kong, and Singapore attended the conference.
Major topics discussed in the conference include the opportunities and challenges in China-Arab cooperation, sustainable finance, and cross-border financial services, as well as the pressing need for multi-level international cooperation to promote the construction of the Western Financial Centre. The roundtable also focused on how the ongoing development of the cross-border financial comprehensive service platform can empower the development of the Western Financial Centre.
Leveraging national strategic layout to
promote high-quality finance development in western China.
In his speech, LIANG Qizhou pointed out the important role of Chengdu as a window for western China’s opening-up, the core city of the Chengdu-Chongqing Economic Circle and an important node in the development of the Belt and Road Initiative. In recent years, Chengdu has continuously improved its level of openness to the outside world, expanded its strategic channels comprehensively, and become the main gateway for cross-border logistics in central and western China.
On one hand, Chengdu will continue to enhance its level of financial openness and cross-border financial services. Relying on its advantages as a node city of the Belt and Road and inland China opening-up, Chengdu is committed to building a comprehensive service platform for cross-border investment and financing and serving countries and regions along the Belt and Road.
On the other hand, with the rise of transition finance, Chengdu is also playing a vigorous part in establishing green finance reform and innovation pilot zone, exploring green financial products related to carbon emissions and pollutant discharge rights, and promoting high-standard development of green financial products and services.
China-Arab relations reaching New Heights, serving as a strong boost for
economic, trade and investment cooperation between Western Financial Centre
and Middle East countries.
NIU Xinchun believes that China’s relationship with the Middle East is currently at its best, and China’s diplomatic attention to the Middle East has unprecedentedly increased. The economic interdependence between the two sides continues to strengthen, especially with the Middle East’s stronger economic dependence on China. In the future, the Middle East’s reliance on China for oil will further increase. This is a significant boost to accelerate the economic, trade and investment cooperation between the Western Financial Centre and Middle East countries.
NIU Xinchun further mentioned that Chengdu has made rapid progress in the field of financial services related to the Belt and Road Initiative. In the future, it is particularly promising to advance higher-level and broader multilateral economic, trade and investment cooperation with key countries in Europe, the Middle East, and Central Asia. He also recommended strategies that “integrates multilateral design and bilateral advancement”.
NIU Xinchun also emphasized the opportunities and challenges brought about by the changes in the Middle East and Sino-Arab cooperation. Recent years witness the stabilizing of political situation in the entire Middle East and a thaw of relations between major countries in the region—a “diplomatic spring” among the major countries of the Middle East. Economically, both large and small countries in the Middle East are racing to carry out economic reforms, mainly due to the immense pressure of energy transition in response to the declining global demand for oil and natural gas in the future. The core objective is economic diversification, which is reflected in the unprecedented friendliness towards foreign investment and the increased efforts to attract foreign capital from Middle Eastern countries. In terms of society, the previous conservative social norms that constrained economic development are in decline and people are embracing new possibilities for social development. This directly contributes to a favorable period for outbound investment and economic cooperation for the Middle East.
Global transition finance calls for multilateral cooperation,
and Western Financial Centre has a key role to play.
Deepening engagement with countries along the Belt and Road in the current international environment is an important pillar of China’s “going global” and “bringing in” strategies. Green investment is gaining increasing attention and popularity as a direction for China’s outbound investment, and it is also an urgent demand for countries along the Belt and Road.
In 2021, global climate finance increased by an average of 28% compared to 2019 and 42% compared to 2020. In terms of the climate finance in 2020, the East Asia and Pacific region accounted for nearly half, with China representing 81% of that share. North America and Western Europe accounted for 1/4, while other countries accounted for less than 1/4. 76% of the funds were raised within one country, with East Asia and the Pacific raising 93% of the funds. However, close to 60% of climate funds in South Asia, the Middle East, and North Africa came from external sources. This clearly indicates a significant lack of climate finance in these regions, particularly in terms of external funding.
Experts at the conference said that the cross-border investment and financial service platform being built in Chengdu can play a significant role in climate finance, particularly in equity investment, which aligns well with the current trend. International financial centres worldwide are also creating similar platforms, but still, Chengdu has a unique mission to fulfill. As an inland financial centre connecting China to the broader Eurasia, Chengdu has a strong potential to serve as a node city and address “the last mile problem” for China and beyond.
Digital infrastructure empowers cross-border investment and financing,
fostering financial development in western China.
Calvin Fu believes that, against the backdrop of Chengdu entering a new stage of development as the Western Financial Centre and the Belt and Road Financial Service Centre, the city is faced with challenges such as information asymmetry in investment and financing for countries along the Belt and Road, high project due diligence costs, limited channel for investment and financing, insufficient application scenario for RMB internationalization, and inadequate product innovation and development. To overcome these challenges, Chengdu is developing the Cross-border Investment & Finance Digital Platform (CIDP) and creating a distinctive digital infrastructure for cross-border investment and financing. With a focus on the Western Financial Centre and serving the entire country, this platform will provide cross-border investment and financing services that integrate information sharing, investment due diligence, market access facilitation, and financial connectivity on a global scale.
Calvin Fu pointed out that the construction of the Western Financial Centre should seize the new opportunities for deepening strategic cooperation between China and the Arab states, and the Middle East is one of the three strategic regions for the development of the cross-border financial service platform. In addition to the Middle East, the platform’s project collection work will also cover over 30 countries and regions in Europe, Asia, and North Africa, spanning more than 25 key industry sectors. It will establish multi-level cooperative relationships with governments, international organizations, professional associations, and important development finance institutions in the target investment countries. Once established, the platform will serve as a “digital bridge” connecting investment and financing services for all countries and regions along the Belt and Road, effectively integrating high-quality project resources and financial resources between the investing country and the host country.
Calvin Fu further stated that this year marks the tenth anniversary of the Belt and Road Initiative and is also a crucial year for the implementation and establishment of the Western Financial Centre. The Chengdu Institute of Financial Innovation aims, with the support of the Chengdu Local Financial Supervision and Administration Bureau and other partners, to develop the Cross-border Investment & Finance Digital Platform (CIDP) into a significant infrastructure for the construction of the Western Financial Centre and the Belt and Road Financial Service Centre. The Institute is committed to exploring a pragmatic model that efficiently coordinates regional development strategies and national strategies.
