Beijing's “Belt and Road Initiative” (BRI) is designed to boost economic growth, develop transportation infrastructure and foster trade. Funders must address the question of financial and environmental sustainability, which are top priorities for Chinese authorities.
In its dedicated Policy Paper (in French), Agence Française de Développement (AFD) makes several recommendations to help promote the convergence of practices between various parties involved in the Belt and Road Initiative. It also offers food for thought in terms of developing a common framework for financing sustainable development.
In this context, AFD has grouped its recommendations into two primary categories, which are further developed in our policy paper available for download here.
The mandatory application by all Chinese financial players, of the new debt sustainability framework published by the Chinese Ministry of Finance would sharply reduce the risk of borrowing States taking on excessive debt and the risk of exposure for financial entities.
Setting “debt alert” thresholds would also be an important step toward more sustainable, better coordinated financing.
Moreover, Chinese membership in the Paris Club would send a strong signal of a willingness to coordinate with other creditor nations while limiting China’s risks of exposure.
Environmental and Social Impacts
Recent greening initiatives for the BRI call for general guidance that can be adapted to help integrate sustainable development into each of the Initiative’s pillars. The commitment to monitor and implement these initiatives, both by China and by partner countries, is a key prerequisite to reducing the environment impacts of BRI projects.
Setting targets that aim to achieve an ambitious proportion of projects that combat climate change would help orient BRI funding toward greater sustainability.
Effectively bringing the BRI into line with sustainable development objectives would require implementing a number of measures:
- Reinforcing environmental and social standards by which projects are measured and monitored;
- Systematically conducting assessments of the economic, social, and environmental impact of projects;
- Ensuring their compliance with the Paris Agreement.
Implementing financing projects between multiple development funders would also promote the convergence of social and environmental standards.
Finally, there is room to consider the interactions between certain sustainable development goals and their potential contradictions.
=> Read our Policy Paper on reducing inequalities through international cooperation