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[Media Focus] GUO Feng of TTGG: “The Belt and Road” Requires More Private Capital to Go Out —A Repor

Date: 2017-06-18
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By China News on June 18. “We cannot merely rely on the state or government to advance ‘the Belt and Road’. Instead, it requires more private capital and enterprises to go out”, GUO Feng, Chief Economist of HEAVEN-SENT Capital Management Group and Managing Partner of TTGG, said in an interview of China News during “2017 Silk Road International Association (SRIA) Inaugural Meeting and 1st Summit” on June 18.

[Media Focus] GUO Feng of TTGG: “The Belt and Road” Requires More Private Capital to Go Out —A Repor

2017 Silk Road International Association (SRIA) Inaugural Meeting and 1st Summit was held jointly by International Finance Forum (IFF), Silk Road International Association and China News Service in Hangzhou, Zhejiang from June 17 to June 18. With the theme of “The Belt and Road, Vision and Action”, it has attracted former dignitaries, experts, scholars, financing institutions and enterprise leadership from neighbors and countries along “the Belt and Road”. It is designed to together build strategic cooperation and dialogue mechanism for internationalization, marketization and folk style of the Silk Road.

GUO Feng showed that investment projects of “the Belt and Road” are funded by Silk Road Fund, Asian Infrastructure Investment Bank (AIIB) and New Development Bank. But it’s not enough to support the construction “the Belt and Road” by government. We have to flex our muscle in innovation-driven path, and widen financial cooperation areas. Compared with profitable projects, the payback period of “the Belt and Road” is long, at great risk, and the government seems insensitive to profitability. With private capital involved, profitability of projects will be guaranteed.

While private capital in the advancement of “the Belt and Road” is self-evident, “the Belt and Road” brings creative development opportunities for private capital. But countries and regions along “the Belt and Road” are underdeveloped, with high political risks and quantitative risks. Faced with information asymmetry, inexperienced SMEs may find them bearing high costs for exploring investment environment and risk assessment. That raises some challenges about private capital to go out.

GUO Feng reckoned China’s state-owned capital and similar government-guided funds may take a guide role in domestic social capital to go out. An agreement can be signed with outstanding private enterprises who boast vast capital, advanced technologies and strong operation & management competence, engaging them in project financing. And the cooperation between private capital or enterprises and government, as well as between private capital and enterprises, is established to prevent risks.

Meanwhile, GUO Feng pointed out, private capital or enterprises to go out is driven more by national policies. The government should create an enabling financial security system as a way to avoid financial risks resulting from element volatility and information asymmetry. That is how we can maintain a favorable investment and financing environment, and get social or private capital involved in the construction of “the Belt and Road”.

(Published in China News; date: June 18, 2017)

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