Chinese, British banks sign deal on B&R cooperation
China Development Bank (CDB) and Standard Chartered Bank have signed a deal worth 10 billion yuan ($1.6 billion) on Belt and Road cooperation.
CDB will make available up to 10 billion yuan in the next five years to Standard Chartered to facilitate Belt and Road projects, according to a press release from Standard Chartered Bank. Standard Chartered will use this to support loans to fund corporate finance projects and trade finance transactions along the Belt and Road, the press release said. The banks signed the memorandum of understanding during British Prime Minister Theresa May's three-day official visit to China, which started Wednesday.
CDB is China's largest development bank. Last year, it set up a special lending scheme worth 250 billion yuan to support Belt and Road cooperation on infrastructure, industrial capacity and financing.
With a presence in 45 markets along the Belt and Road, Standard Chartered Bank announced in December a plan to spend at least $20 billion to finance projects under the Belt and Road Initiative by late 2020. The Belt and Road Initiative, proposed by China in 2013, aims to build trade and infrastructure networks connecting Asia with Europe and Africa based on ancient land and maritime trade routes.
Meanwhile, China has planned for creating new international courts for Belt and Road disputes.
China's continent-spanning network of infrastructure investments - known as the Belt and Road Initiative - keeps expanding. So do the legal risks.
Multi-jurisdictional dealings between Chinese entities and their emerging market counterparts can pose immense regulatory challenges, especially in the realms of financing and execution. To address trade and investment disputes along the Belt and Road, the world's second-largest economy intends to establish international courts in Beijing, Xi'an and Shenzhen, local media reports announced last week.
The new institutions will be based on Beijing's existing judiciary, arbitration and mediation agencies, according to state-run media outlet Xinhua. There are concerns, however, that the China-led legal system will favor local parties over foreign players. "The fact that the arbitration courts will be under the Supreme People's Court will be a red flag for many corporate entities," said Hugo Brennan, analyst at risk consultancy Verisk Maplecroft, referring to China's highest judicial body. "The judiciary is subservient to the Chinese Communist Party and its interests, which will raise legitimate concerns around impartiality."
Excessive Chinese control is a frequent complaint about President Xi Jinping's initiative to boost Beijing's economic influence throughout Asia and Europe, with the gov- ernment deciding which countries get funding and when. Critics have said Beijing is using the multibillion-dollar program of railways and ports to push its political and economic agenda in the developing world.
"It is uncertain how much the legal authority of China is expected by Beijing to influence disputes, which by their cross-border nature, are also bound by other nations' sovereign laws," Chris Devonshire-Ellis, founder at Dezan Shira & Associates, an Asia-focused advisory firm specializing in legal, accounting and compliance services, wrote in a recent note.