Question – It has been nearly one year and a half since you were appointed the special envoy for the Belt and Road Initiative (BRI) of the British Treasury. What do you think the BRI means to the UK?
Flint: I think the BRI has matured greatly over the last two years. I think for the UK, it′s a very big opportunity to do a number of things. As the international financial market is located in the UK, we can contribute to building capacity for the BRI by leveraging its skill set to take high quality projects with good governance, high standards, and capacity for funding the projects. And I think the Belt and Road will be much bigger and more successful.
I also think that as the UK goes forward in a different role once it has left the EU, the BRI is a great opportunity for the UK to continue to project its influence in terms of contributing to global initiatives, as the BRI is one of the most significant global initiatives taking place in the world today.
Question – For the UK, under what conditions can a Memorandum of Understanding (MOU) on the BRI possibly be on the table?
Flint: There is so much cooperation taking place at the moment. I think it would be wrong to place undue emphasis on a single document. We’re cooperating in so many ways. We have my role as a special envoy. We have the green investment principles the UK signed up to with the BRI and financing principles. We signed up to a technical agreement on connectivity. There’s this huge amount of work being done and we have a huge ambition to do more. Therefore, I wouldn’t get hung up on a single memorandum of understanding.
I think having a special envoy for the BRI signifies the government’s interests in promoting the economic value and benefits of cooperation between China and the UK. I think no two countries have done more in terms of building financial systems for the 21st century than the UK and China together: the fintech, green principles, the internationalisation of the renminbi (yuan) and the BRI are probably the biggest of them all. So there are many levels of cooperation.
Question – UK Minister of State for Trade and Export Promotion Baroness Fairhead CBE said last year that Britain was intending to position London as the premier global centre for funding and facilitating BRI projects. How is this plan going so far?
Flint: It’s going very well. We set up an expert board under the Chancellor, which I co-chair with the Financial Secretary to the Treasury. We’ve got about a dozen members on that board, including members from three of the major Chinese institutions, Bank of China, Construction Bank, and China Development Bank, and some other international institutions as well as UK institutions.
The principal product of that has been the creation of an asset class paper, which we shared with our Chinese counterparts. This is creating an ambition that if we’re successful, we would ultimately see infrastructure creating a separate asset class, creating a framework of fixed income and instruments that would be very attractive to long-term savers’ pension funds.
I think it would be a tremendous achievement and would add luster and capacity to the Belt and Road.
Question – The UK also said it plans to co-fund a financial technology centre in Xiong ′an New Area. What are the latest developments of this plan? Why is the UK interested in investing in Xiong ′an?
Flint: I think there’s ongoing cooperation at the firm-by-firm level and indeed by regulators and policymakers in terms of fintech involvement. China has a very active fintech market. London has a very active fintech market. And the cooperation is incredibly positive largely because fintech really has no geographic boundaries.
I mean it’s in the cloud and the net, and people who work in that are working in the digital, virtual world. So, cooperation is very strong and there are lots of joint participation’s and joint projects. It has been really done at a firm level.
We are interested in this plan because we are interested in being pioneers in financial markets. We believe we have a great deal to offer. We’ve seen the success that creating fintech hubs in the UK has created. So if we can be helpful in terms of contributing to another fintech centre, that will contribute to better products, better experiences for customers.
Question – How do you evaluate the transparency of the BRI projects?
Flint: I think it is getting better. I think one of the challenges that BRI faces is that it hasn’t always been transparent, where the financing has come from and how much the financing has been. Debt sustainability now is top of the agenda for all countries, and China has made it very clear how important the debt sustainability is as well. And it’s creating measures to promote that.
I think in the first stage of the Belt and Road, it was largely bilateral between China and the host countries. Now I think the projects have become more international, there will be much more transparency.
Transparency is necessary to demonstrate the technical standards, the governance standards, and the financing standards that international investors look for to be comfortable that they’re investing in something that meets their mandates. The BRI will only be as successful as it can be if it becomes more transparent and that’s recognised by everybody. So it’s moving along very solidly.
Question – Will the participation of the UK bring good governance and European standards to the BRI?
Flint: I would not call it European standards. I think it’s international standards. And I think China has a very big role to play in working to contribute to the development of standards that are leading in terms of global infrastructure projects. China has done more infrastructure development than any other country, so it has a huge amount to offer.
With more international participation, more international markets and financial markets, the more standards will evolve and new standards will evolve because there are greater complexities in dealing with many of the emerging markets that are significantly behind where China is.
They will need to carefully consider developing new products and new elements of standards to bring those much less developed countries into the international finance. And that’s very exciting.
Question – What’s your take on the claim that the BRI investments are dividing the UK?
Flint: No. I think there are always a number of different views, but when you stand back, globally everyone agrees that the world needs more infrastructure.
Everyone agrees that there are three major challenges in the world that can only be addressed through multilateral involvement: climate change, the impact of failed states, and threats that bring disharmony and even terrorism, and the impact of demographic changes to population growth.
These can be addressed through building viable economic activity in countries that are well behind the rest of the world in terms of income levels and access to energy and water and transportation
And if population growth continues, then future migration will be extraordinary, dramatic, and challenging for the world to deal with. So if we don’t invest now, the extra 2 billion people projected to be in the world by 2050 will be a major source of tension and burden and conflict to a world that hasn’t enabled the countries in which those people are going to be born into to have the capacity to deal with them.
You know that is a threat or a challenge that can only be dealt with in a multilateral basis. No country could do this on its own. It’s a global need. I think every country can see that. Therefore, when there are nuances around aspects of the BRI, and in a world of confirmation bias, you can find projects that demonstrate how successful, as you can find projects that have not been successful or well executed. So it′s important that we look at it in the aggregate terms of what it has already delivered, which I think is very impressive.
It’s wrong to focus on the two or three things that may have gone wrong, or just to focus on the many that have gone right.
So I think Europe would definitely have a shared view on globalisation and multilateralism on the importance of infrastructure development and the importance of enhancing global equality and the importance of building energy for emerging markets that meets climate change standards and so on.
The alignment of the Belt and Road within the sustainable development goals is very clear. The cooperation agreement that’s now being signed by the world’s leading multilateral development banks is again evidence of the fact that this is part of a global requirement to address infrastructure over the next 20, 30 years and beyond.
Question – A short time ago, the European Commission labelled China a “systemic” and economic rival of the EU. We would like to know how would you define China? Do you consider China as a partner, competitor or rival of the UK?
Flint: Personal view, it′s a partner. I mean, trading is all about competition but at the same time partnership. Supply chains are global, opportunities to trade involve buying things and selling things. So your competitor is also your market. Your competitor improves your own standards.
The more competition there is in the world, the better it is. The more we can drive economic growth and other countries, the bigger markets for our own goods. Britain has always been an outward focused global trading nation, a nation that has attracted foreign investment and has invested outside.
So a world of multilateralism, of globalisation, of engagement, of healthy competition and fair competition is a world that we admire.