Harmonizing Investment and Financing Standards towards Sustainable Development along the Belt and Road
In the fall of 2013, Chinese leader Xi Jinping announced the Belt and Road Initiative (BRI) as a means to mobilize resources, strengthen connectivity links, leverage potential growth drivers and connect markets with a view to integrating more countries and regions into economic globalization and achieving shared prosperity through mutually beneficial cooperation. Aligning the BRI with the United Nations 2030 Sustainable Development Goals (SDGs) adds to the momentum of achieving inclusive development and sustainable growth.
A new report jointly developed by China Development Bank (CDB) and the United Nations Development Programme (UNDP), with contributions from Kevin P. Gallagher, reviews global practices in finance and investment flows and ways to align financing associated with the BRI with sustainable development principles. The authors propose harmonized standards to further promote the BRI’s aspiration of creating win-win partnerships for inclusive development, while advancing achievement of the SDGs.
- Respecting BRI partner countries’ existing constraints and legal setting, harmonize environmental assessment standards in line with the UN’s environmental requirements for sustainable development.
- Support shared prosperity and promote employment in participating countries to support poverty alleviation and balanced development.
- Promote strategic alignment with national development priorities and plans and ensure economic and social benefits of projects.
- Harmonize programs and management systems for debt sustainability assessments in BRI partner countries and strengthen debt management to ensure that it is carried out in an effective manner.
- Ensure full-cycle sustainability for the financing and investment of BRI projects, and establish an effective, multi-level financial and investment system.
- Adhere to openness and transparency in procurement, standardizing and internationalizing the flow of goods.
- Adhere to general international financial risk management requirements and establish a framework for the identification and reduction of risk throughout the entire project.
- Implement rigorous and objective project evaluation procedures through the establishment of an evaluation mechanism that monitors progress throughout the project financing and implementation process.
The authors note that these standards cannot be taken “off the shelf ” and instead need to be developed in coordination with BRI partner countries over a period of time, taking guidance from the SDGs, the distilled wisdom from international practice, from China’s own vast development experience and also from forward-looking considerations. Given the scale and scope of the BRI, agreeing on, applying and implementing such harmonized standards can critically contribute to sustainable development, in particular, to the attainment of the SDGs. The large number of countries that would sign up for standards compatible with global ones could bring the world close to a tipping point in applying lending and investment standards that firmly promote sustainable development.Read the Report