Sunday, August 21, 2016

The Increasing Presence of China in Global Finance - What Exactly Does this Portend?



China is penetrating into world markets far away from home. The country is now funding development activities in Africa- very many of them. 

They are working on expanding their own projects in various parts of the vast Chinese terrain. On the 14th of December, China’s application for inclusion into the European Bank for Reconstruction and Development was approved by the board of governors. 

This is one of the many global and regional development organizations that China is a part of. The membership into EBRD is an indication of China’s great ambitions for engagement in the world’s finance.

What does this really mean to the world and to the people of China? The fact that China is finally a member of EBRD is not a surprise. It simply reflects the increasing role of the Chinese government in international policymaking on matters economics.


Global strategy


The membership in EBRD is part of the outward-looking approach that is held by China in regards to global financial architecture. 




The conception of AIIB (Asian Infrastructure Investment Bank) and NDB (New Development Bank) is part of the strategy that is being used by the Chinese government to penetrate into the world of financial policymaking. This strategy goes far deeper than this. 

The Silk Road Fund is probably a more important decision. This unilateral institution has made immense investments already. It also has greatly ambitious plans for development of the large space between Europe and China.

AIIB and NDB are significantly constrained in terms of finances. Alone, they will not be able to meet the overall financial gap for the infrastructure in developing countries without landing into huge debt themselves. 

However, the Silk Road Fund and several other Chinese development institutions such as the China Development Bank are going to make a huge difference, Although there is still going to be a lot of space for more developmental initiatives owing to the presence of large unmet needs.

In 2014, the African Development Bank together with the People’s Bank of China (PBOC) launched what they dubbed the Africa Growing Together Fund. 

This fund which will be disbursed over the next ten years is set to make great changes in the infrastructural developments of Africa. It is worth $2 billion. China’s presence is not being felt only in Africa but also in the Caribbean and Latin America. 

In 2008, China partnered with the Inter-American Investment Bank, an indication of the country’s growing economic as well as political links with these two regions.


What does this mean for China?


Sure, many parts of the world are benefiting greatly, especially when it comes to infrastructural development. 




However, what does this really mean for China? Generally, with the presence of the country being felt in various parts of the world- economically- they are going to have more power in economic policymaking across the globe. 

There are also many financial institutions that have been made. They are increasingly being forced to step into some really complex political processes plus engage with the civil society. 

This is an area where China is going to have to make great improvements in. The nation will also learn how to make better international investments and how to make better use of its revenue domestically.

1 comment:

  1. The global financial system is the worldwide framework of legal agreements, institutions, and both formal and informal economic actors that together facilitate international flows of financial capital for purposes of investment and trade financing. China has increased their presence in global finance. It’s a fact that they have to fall in large debt to meet the financial gap for the infrastructure. Debt is the problem with millions of people in the world. It is better to take help of debt consolidation loans to clear the debt. Overall the article as informative.

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