People’s Bank of China: the advantages of cooperating with the EBRD

By Svitlana  Pyrkalo
@pyrkalo


Jun Zhu, Director-General of the International Department of PBoC, talks to EBRD.com about advantages of cooperating.

A representative of China has addressed the EBRD Board of Directors as a shareholder for the first time, less than two weeks after the country formally became the EBRD’s 67th member.

Jun Zhu, Director-General of the International Department of People’s Bank of China (PBoC), said in her address to the Board that cooperation between the EBRD and China has great potential and could bring benefits to both parties and to EBRD countries of operations.

After the Board meeting, Jun Zhu answered some questions for our website.

Jun Zhu: We value China’s accession to the EBRD, it is of great importance to us. As I mentioned this morning, China has long pursued accession to the EBRD – for nearly 10 years. We think the EBRD and China have a great potential in further bilateral cooperation. On the other hand, China is a huge transition economy, and we are still facing challenges in setting up market economy mechanisms to enable the market to play a bigger role in the country’s economy. In this, we face similar challenges and difficulties with some of the EBRD’s countries of operations, like central and eastern European countries or Central Asian countries. We think the EBRD and its other shareholders can give us very valuable suggestions and proposals. In this way, we can benefit from the accession to the EBRD.

On the other hand I think China is now a very big economy. And we benefited from the international community a lot. But we cannot only benefit – we have to make some contributions, so we have to play a more active role internationally. So by joining the EBRD, China can contribute not only to bilateral cooperation with the EBRD, but also to projects which the EBRD and other shareholders are supporting to help their countries of operations, to better transition to market economies and to smooth the market volatilities. We see great potential in such cooperation.

EBRD.com: China’s role in the fight against climate change was keenly analysed in Paris at COP21 last year, and the whole world is paying attention to China’s position on sustainable energy and climate change. How can China and the EBRD cooperate in sustainable energy, carbon finance and Green Economy Transition?

Jun Zhu: The Chinese government has been advocating for years for more energy efficient and environmentally friendly growth patterns in economic transition. We were quite positive and constructive at the Paris COP21 conference two months ago. This year, China has the presidency of the G-20. We also set up two study groups. One is a green finance study group; it is trying to mobilise private sector resources to support green development of the economy, to advocate for reduction of carbon emissions, more attention to environmental protection and energy efficiency. This working group is co-chaired by China, the UK and the UN. Within the PBoC we have a Green Finance Committee. We have done a lot of studies on how to mobilise resources – not only the public but also private sector money – to support green economic growth. Environmental protection is a topic hotly debated in China, so it is good for China. We have a very harmonised voice, to call for more protection of the environment, to reduce pollution, so it is a priority for the government. The central bank has taken a lead in this area; the Green Finance Committee has done a lot of research. We are trying to advertise all of our policy suggestions to the international community and other agencies to obtain their support and to try and steer the Chinese economy onto this path.

The second working group on climate finance is a traditional working group under the G-20 finance track, and the main purpose of this working group is to mobilise the public sector money to support carbon emissions reductions and environmental protection. This working group is led by our Ministry of Finance. So in this way you can see that both the central bank and the Ministry of Finance have paid great attention to this issue and try to lobby and persuade not only the Chinese society, but also the international community, to keep economic growth sustainable.

EBRD.com: The EBRD is increasing its investments in Central Asia, and the Bank and China are already talking about potential cooperation, especially in rebuilding the Silk Road and improving the region’s infrastructure. Both China and the Bank are already very active in this area. So what is the advantage for the EBRD and China of joining forces, rather than continuing to invest separately?

Jun Zhu: There are huge benefits of cooperation. We have the One Belt, One Road initiative. It covers the old Silk Road area, and this geography has huge overlap with the EBRD’s region. It covers Central Asia, eastern and central Europe, some parts of the Middle East and North Africa. And yes, we could both continue investing on our own – in China we have very close cooperation with Central Asian countries, especially in recent years – but we think it would be a win-win situation if we can mobilise multilateral development banks (MDBs), including the EBRD and AIIB, together with us, to help other countries improve their infrastructure investments. It has not only to do with investment size, but also with investment expertise, evaluation and assessment of projects, and also human resources accumulation. For all of these kinds of accumulation China needs the expertise from MDBs. I think the EBRD has taken the lead in this area, they have a very good pool of projects and understanding of individual countries, and a very good relationship with the private sector which we lack. The  EBRD has a lot of professional investment bankers and experience with private companies which we in China don’t have on our own. And for the EBRD, China could also be helpful in this area. Not only in the One Belt, One Road initiative, but also because of our bilateral links to many countries.