2) Expanding trade. From 2013 to 2018 the value of trade between China and other B&R countries surpassed US$6 trillion, accounting for 27.4 percent of China's total trade in goods and growing faster than the country's overall foreign trade. In 2018 the value of trade in goods between China and other B&R countries reached US$1.3 trillion, growing by 16.4 percent year on year. Trade in services between China and other B&R countries has seen steady progress, growing by 18.4 percent from 2016 to reach US$97.76 billion in 2017. The figure accounted for 14.1 percent of China's total trade in services, 1.6 percentage points higher than in 2016. According to a World Bank study that analyzes the impact of the Belt and Road Initiative on trade in 71 potentially participating countries, the initiative increases trade flows among participating countries by up to 4.1 percent. (Quote 1)
3) Faster pace of trade model innovation. New trade models such as cross-border e-commerce are becoming an important driver of trade. In 2018 the total value of retail goods imported and exported through the cross-border e-commerce platform of China Customs reached US$20.3 billion, growing by 50 percent year on year. Exports were US$8.48 billion, growing by 67 percent year on year, and imports were US$11.87 billion, growing by 39.8 percent year on year. As Silk Road e-commerce prospers, China has established cooperation mechanisms for bilateral e-commerce with 17 countries, created agreements on e-commerce cooperation under the BRICS and other multilateral frameworks, and made solid progress in finding overseas partners for Chinese businesses and developing Chinese brands.
4. Financial integration
Financial integration is an important pillar of the Belt and Road Initiative. Exploring investment and financing models, international multilateral financial institutions and commercial banks have played an innovative role in expanding the channels of diversified financing, providing stable, transparent and quality financial support for the Belt and Road Initiative.
1) Exploring new models of international investment and financing. Boasting huge cooperation potential in infrastructure construction and industrial capacity, the Belt and Road Initiative is in urgent need of finance. The sovereign wealth funds and investment funds of the participating countries are playing a bigger part. In recent years the Abu Dhabi Investment Authority of the UAE, China Investment Corporation and other sovereign wealth funds have markedly increased investment in major emerging economies participating in the initiative. The China-EU Joint Investment Fund, which began operation in July 2018 with an injected capital of EUR500 million from the Silk Road Fund and the European Investment Fund, has helped the Belt and Road Initiative to dovetail with the Investment Plan for Europe.
2) Growing support from multilateral financial cooperation. China's Ministry of Finance and its counterparts in 27 countries including Argentina, Russia, Indonesia, the UK, and Singapore have endorsed the "Guiding Principles on Financing the Development of the Belt and Road". According to the Principles, the countries participating in the Belt and Road Initiative support channeling of financial resources to serve the real economy of countries and regions involved, with priority given to such areas as infrastructure connectivity, trade and investment, and industrial cooperation, among others. The People's Bank of China has rolled out joint financing programs with the International Finance Corporation under the World Bank Group, Inter-American Development Bank, African Development Bank, European Bank for Reconstruction and Development, and other multilateral development institutions. By the end of 2018 these institutions had invested in more than 100 programs in over 70 countries and regions. Established in November 2017, the China-CEEC Bank Consortium includes 14 financial institutions from China, Hungary, the Czech Republic, Slovakia, Croatia, and nine other Central and Eastern European countries. In July 2018 the China-Arab States Bank Consortium was founded, followed by the China-Africa Financial Cooperation Consortium established in September; each was the first multilateral financial cooperation mechanism between China and the respective area.
3) Closer cooperation between financial institutions. In building the Belt and Road, policy-backed export credit insurance, which has wide coverage, plays a special role in supporting infrastructure and basic industries. The strengths of commercial banks lie in taking deposits from wider sources, corporate financing, financial products, trade agency, and trust services. By the end of 2018 the China Export & Credit Insurance Corporation had endorsed US$600 billion on export to and investment in the participating countries. Chinese-financed banks, such as the Bank of China, Industrial and Commercial Bank of China, Agricultural Bank of China, and China Construction Bank, have formed extensive agent banking relations with the participating countries. Commerzbank became the first German bank to join the banking mechanism of the Belt and Road Initiative when it signed an MoU on cooperation with the Industrial and Commercial Bank of China.
4) Improved financial market system. The initiative's participating countries have made continued efforts to consolidate and improve financial cooperation for long-term benefits and win-win outcomes. With a steady supply of innovative financial products, channels for financing the Belt and Road Initiative have expanded substantially. China has continued to open up its interbank bond market. By the end of 2018 about RMB200 billion of Panda bonds had been issued. The Export-Import Bank of China issued a RMB2 billion green bond for global investors, and the BRICS New Development Bank issued a RMB3 billion green bond to support the green development of the Belt and Road Initiative. Stock equity, business and technical cooperation between securities and futures exchanges has advanced. The Shanghai Stock Exchange, Deutsche B?rse Group, and China Financial Futures Exchange jointly founded the China Europe International Exchange in 2015, and the Shanghai Stock Exchange and Astana International Financial Center Authority of Kazakhstan have signed an agreement to co-invest in building the Astana International Exchange.
5) Deeper financial connectivity. Eleven Chinese-funded banks have set up 76 first-grade institutions in 28 B&R countries, and 50 banks from 22 B&R countries have opened 7 corporate banks, 19 branches, and 34 representative offices in China. Two Chinese-funded securities firms have established joint ventures in Singapore and Laos. China has made bilateral currency swap arrangements with more than 20 B&R countries and Renminbi clearing arrangements with 7 B&R countries, and signed cooperation agreements with the financial supervision authorities of 35 B&R countries. The Reminbi's functions as a currency for international payment, investment, trade, and reserve have been strengthened. The Cross-Border Interbank Payment System (CIPS) now covers some 40 countries and regions involved in the Belt and Road Initiative. The China-IMF Capacity Development Center and the Research Center for the Belt and Road Financial and Economic Development have been founded.
