Belt and Road investment requires diversified financing

China will improve its diversified financing system for enterprises taking part in the Belt and Road Initiative, the China Securities Journal reports.

The report said that in the future China may integrate its capital market with those of the countries taking part in the initiative.

Commercial banks, the main financer for enterprises, cannot meet the huge capital demand of the Belt and Road infrastructure projects, which the International Monetary Fund predicts will require over $3 trillion in investment over the next five years.

Experts suggest that the countries involved should strengthen intergovernmental cooperation to provide more policy-based financial support for the projects. The banks need to seek greater innovation in their financial services to provide long-term and low-interest loans. The countries can step up their efforts to integrate their capital markets and attract more funds to finance the Belt and Road projects.

Countries can introduce more development financing agencies, including multilateral financing agencies, and increase the role of insurance agencies to provide more diversified financial services to these enterprises.

They also can better utilize more inclusive finance such as green finance and technology finance to fund Belt and Road projects.

Public-private-partnership and asset securitization are also useful tools for supplying enterprises with funds. There should also be credit rating agencies serving China and the other BRICS countries to rate the Belt and Road financial agencies and lower their financing costs.