The City of London should be “the partner of choice” for China as it seeks international finance for multibillion-dollar Belt and Road infrastructure projects, Chancellor Philip Hammond has told a top-level conference in Beijing.
Mr Hammond’s comments reflect the UK’s determination to win a large slice of contracts related to the initiative, despite Theresa May’s refusal formally to endorse it during her visit to the country last year.
Speaking to the Belt and Road Forum, the Chancellor stressed the UK’s concerns over compliance with international standards and the need to ensure that countries involved are not saddled with unsustainable debt.
He welcomed a “triple pledge” by the Forum’s host, President Xi Jinping, to ensure high standards, maintain China’s commitment to free trade and continue the reform of the Far East giant’s economy.
The Belt and Road Initiative (BRI), unveiled by Mr Xi in 2013, envisages trillions of dollars of investment in new land and sea routes linking China with the West over the next 30 years.
Some one trillion dollars worth of infrastructure schemes are already understood to be under way.
China believes it will power a new era of global trade, but some observers fear that Beijing’s plans to lend as much as eight trillion dollars to dozens of countries in Asia and Africa will leave them exposed to perilous levels of debt.
The US has been wary of giving its support to the epic project and Mrs May declined to sign a memorandum endorsing it last year, while some Asian and African leaders have warned that it smacks of neo-colonialism
Speaking in Beijing, Mr Hammond made clear the UK hopes to win lucrative work providing financial, legal and design services for the initiative.
To unlock the private finance that will need to play “an ever greater role” in funding the initiative, he said China will need to establish a “recognised infrastructure asset class for Belt and Road projects … that global investors will recognise and trust”.
“I want to offer London’s world-class expertise in project financing and the associated legal, professional and technical skills as a partner of choice in delivering these international-standard infrastructure projects,” he said.
Voicing the UK Government’s reservations, Mr Hammond said: “The UK is committed to helping to realise the potential of the BRI – and to doing so in a way that works for all whose lives are touched by the project.”
It was “essential” that Belt and Road projects operate “to the highest international standards” in accordance with the existing rules-based system, he said.
And he said that projects must be undertaken “with fair terms, sensitivity to local concerns and traditions and the highest environmental standards, all delivered to international norms of good governance with full transparency around projects and around the sustainability of the debt that partner countries are incurring to secure them”.
This would ensure that host countries, investors and promoters all benefit from the initiative and make the BRI “an exemplar of how globalised, open economic co-operation can deliver benefits for all,” he said.
In a speech opening the forum, Mr Xi sought to allay concerns over the BRI, saying: “We need to pursue open, green and clean co-operation.
“Everything should be done in a transparent way and we should have zero tolerance for corruption.”
He won backing from Vladimir Putin, who said that China’s plans “fit perfectly” with the goals of the Russia-led Eurasian Economic Union, easing concerns over the potential for Moscow and Beijing competing for influence in former Soviet states.
Mr Hammond’s visit got off to an awkward start when Vice-Premier Hu Chunhua highlighted “fluctuations” in relations between the UK and China in recent months.
Mr Hu told the Chancellor there had been “regrettable” differences over the South China Sea, in what was seen as a reference to Defence Secretary Gavin Williamson’s suggestion that the Navy’s new aircraft carrier could be deployed to the Pacific.
Mr Hammond, whose planned trip to China in February was reportedly pulled because of Mr Williamson’s comments, insisted that the UK took “no position” on the ongoing disputes over the South China Sea.
The Chancellor announced a UK-China Economic and Financial Dialogue summit will take place in London in June, continuing what he described as a “golden era” in relations between the countries.