Private sector may hold key to global connectivity

Encouraging greater private sector investment in cross-border infrastructure connectivity lies at the heart of advancing inclusive, sustainable global development amid rising uncertainties and global challenges, officials and financial experts said on Wednesday.

Addressing the 10th Annual Meeting of the Board of Governors of the Asian Infrastructure Investment Bank, Finance Minister Lan Fo'an said that many developing countries are facing funding gaps for cross-border connectivity investment, due to limited public resources amid slowing global economic growth and declining international development aid.

More effective mobilization of private sector capital can help address the bottleneck of insufficient public funding and play a vital role in supporting connectivity initiatives, Lan said on Wednesday.

"China is ready to work with all parties to continue supporting the AIIB in playing a proactive role and sharing best practices to strengthen support for private sector investment in cross-border connectivity projects — all to advance global sustainable development," Lan said.

The minister said that there is room for the AIIB to further promote alignment of rules and standards among members, explore innovative financing mechanisms, improve multiple financing tools including local currency financing, and leverage public capital to play a guiding role, in order to ease private investors' concerns about risks such as geopolitical uncertainty and sovereign debt default.

Jin Liqun, president and chair of the board of directors of the AIIB, said that while much of the bank's current portfolio focuses on transportation infrastructure like roads and railways, the multilateral development bank has increasingly turned its attention to less physical areas of connection, such as financial platforms that enable cross-border trade and transmission lines that link energy markets.

According to Jin, infrastructure today is not confined to its traditional, narrow definition, but is more broadly interpreted to align with the new, artificial intelligence era.

"Our presence gives private investors confidence that these funds (that they invest) will be well-governed and invested in high-quality assets," Jin said, encouraging the bank's private-sector partners to continue to engage with the AIIB for greater, deeper cooperation.

"There is a Chinese proverb — When everyone gathers firewood, the flames will go on," said Jin.

Data from the bank shows that the AIIB's cross-border connectivity projects accounted for 33 percent of its annual portfolio in 2024, contributing to the connectivity of the Asia-Pacific region and economic and trade cooperation with other regions.

Rodrigo Salvado, director-general of the AIIB's Operational Partnership Department, told China Daily on the sidelines of the conference that the bank will take a multipronged approach to bring in more financing from private sector partners, including leveraging financial instruments like insurance and warranties to ease financial risks for private capital.

The bank will also make more upstream investments, which refers to early-stage, preparatory activities that lay the groundwork for viable development projects, Salvado said, adding that private capital mobilization continues to be a key priority for the AIIB.

Lan, the finance minister, also said that through years of practice, China has developed experience in supporting private sector investment, with the law on promoting the private economy, which took effect last month, explicitly supporting private sector involvement in modern infrastructure investment and construction.

"On this basis, we will continue to improve the institutional environment to fully encourage private enterprises to participate in the construction and operation of infrastructure projects, including those related to cross-border connectivity," he said.

Emphasizing infrastructure connectivity as a key area of collaboration in coping with global challenges, Hua Zhong, a senior official at the National Development and Reform Commission's department of foreign capital and overseas investment, also noted China's commitment to expanding the scope of cooperation on infrastructure connectivity.

Contact the writers at zhoulanxv@chinadaily.com.cn