Live on Bloomberg TV

00:00FROM TOKYO THIS MORNING. THANK YOU SO MUCH FOR JOINING US. THE HEADLINE TO YOUR REPORT, THE BELT AND ROAD INITIATIVE, A BOOM, , BUST, OR A BUZZWORD? > > IT IS IN TERMS OF HOW YOU LOOK AT IT. IF YOU LOOK AT IT FROM TRADE, TRADE HAS IMPROVED. LAST YEAR, CHINESE IMPORTS HAVE INCREASED BY ABOUT 22%. 16% FOR CHINESE INPUT. THERE ' S A BOOST IN DEMAND FROM CHINA. FROM AN INVESTMENT POINT OF VIEW, WE HAVE INCREASED THE INVESTMENT FROM CHINA TO THE BELT AND ROAD MARKET. WHEN YOU LOOK AT THE INFRASTRUCTURE SPENDING, WE SEE IT GROWING AND IMPROVING MANY MARKETS. IN THAILAND, CAMBODIA. IN THE SHORT-TERM, THERE HAVE BEEN BOOSTS FROM THE BELT AND ROAD INITIATIVE. YVONNE: THERE IS BOOSTS. COMING OUT AT A PRETTY SENSITIVE TIME. WE HAVE CRITICS SAYING THIS IS MODERN-DAY COLONIALISM, JUST A ONE-WAY ROAD. NOT TO MENTION THE PILES OF DEBT THESE COUNTRIES HAVE TO PILE ON. ARE THESE CONCERNS FAIR? MAHAMOUD: THESE ARE CLEAR CONCERNS. IF YOU LOOK AT THE BELT AND ROAD, THERE ARE THREE CHALLENGES. ONE IS THE FINANCIAL SUSTAINABILITY. IF YOU LOOK AT THE CHINESE SITUATION, THEY ARE IN DEBT. OVER 250% GDP. YOU HAVE FRAGILE STATES WHO CANNOT AFFORD INFRASTRUCTURE SPENDING. IN THE CASE FOR SRI LANKA, PAKISTAN, EVEN MONGOLIA. THIS IS A CLEAR ISSUE. THE STEPS AIMED AT -- THE FINANCIAL SYSTEM -- THE FINANCIAL SUSTAINABILITY WILL CREATE AN ISSUE. TWO OF THE BIG ISSUES OF THE REGULATORY RISK AND LEGAL RISKS BEHIND THE BELT AND ROAD, ALSO THE POLITICAL TENSION BETWEEN BELT AND ROAD MARKETS BETWEEN CHINA AND SEEING THIS PROJECT AS A THREAT. HASLINDA: I ' M WONDERING WHETHER WE CAN EXPECT A RESET OF THE BELT AND ROAD INITIATIVE WHEN IT XI JINPING MEETS OTHER LEADERS LATER THIS YEAR, GIVEN THE PUSHBACK WE HAVE BEEN SEEING? MAHAMOUD: WHAT WE CAN SEE IS AN ADJUSTMENT OF SOME OF THE INITIATIVE. THE BELT AND WROTE STARTED IN THE BEGINNING AS A NOT VERY STRUCTURED STRATEGY. IT ' S CLEARLY CHANGING. THE BELT AND ROAD WILL PROBABLY BE ADJUSTED FOR OTHER MARKETS. CLEARLY, WE WILL HAVE ADJUSTMENT GOING FORWARD FOR THE BELT AND ROAD INITIATIVE. HASLINDA: IN THE LONGER TERM, HOW DO YOU SEE CHINA BENEFITING FROM THE BELT AND ROAD INITIATIVE? THERE ARE ISSUES ABOUT OVERCAPACITY, WANTING TO INTERNATIONALIZE THE RENMINBI. WILL THAT BE ACHIEVED? MAHAMOUD: WE EXPECT THE BELT AND ROAD TO BRING ABOUT $170 BILLION OF ADDITIONAL EXPORTS THIS YEAR. OUT OF THIS $170 BILLION, MORE AROUND $50 BILLION WILL BE ADDITIONAL EXPORTS FOR CHINA. WE WILL HAVE MORE DEMAND FOR CHINESE GOODS. THIS WILL CAUSE US TO BE OVERCAPACITY. THE BELT AND ROAD INITIATIVE HAS BEEN A BIG DRIVER FOR STEEL,, MINING, OR COLD. WE WILL HAVE CHINA ADDRESS THE ISSUE. IT WILL ALSO BE A WAY TO FOR CHINA. IT WILL BE A WAY FOR THEM TO DISTRIBUTE THE PRODUCT AND HAVE NEW CLIENTS OUTSIDE OF THE MAJOR ECONOMIES. YVONNE: THE U.S. HAS BEEN PRETTY CRITICAL ABOUT THIS WHOLE MISSION FROM XI JINPING. THEY FAILED TO DELIVER AN ALTERNATIVE. DO YOU SEE ANY ALTERNATIVES TO FINANCE THE INFRASTRUCTURE NEEDS IN THE AREA? MAHAMOUD: I THINK ALL MAJOR SUPERPOWERS SEE THIS PROJECT AS A THREAT. IT IS A WAY FOR CHINA TO CREATE ECONOMIC INTEREST. IT ' S A REASON WHAT YOU HAVE IT FROM THE MAJOR SUPERPOWERS. CHINA IS THE ONE PUSHING FOR MORE FINANCIAL IN TODAY ' S MARKET. THIS IS CLEARLY A WAY FOR THEM TO GET FINANCING WAS THE OTHER MARKETS DON ' T GIVE THEM ACCESS TO FINANCING. HASLINDA: YOU SAID THERE ' S NO PROPER ALTERNATIVE. WHEN YOU TAKE A LOOK AT SOUTHEAST ASIA, JAPAN HAS BEEN THE KEY FINANCIER IN THIS PART OF THE WORLD. DO YOU SEE CHINA TAKING OVER JAPAN ' S ROLE GOING FORWARD? MAHAMOUD: I DON ' T THINK THEY ARE EXCLUDING THEMSELVES. THERE IS A POSSIBILITY TO USE ALL OF THESE SOLUTIONS. I WAS TALKING ABOUT SRI LANKA, PAKISTAN, THEY STRUGGLED FOR FINANCING. THE ASIAN MARKET, IF YOU TAKE MARKETS LIKE THAILAND, MALAYSIA, OR INDONESIA, YOU CAN HAVE SUPPORT FROM OTHER COUNTRIES LIKE THE U.S. AND JAPAN. I BELIEVE THIS MARKET CAN BENEFIT FROM SUPPORT FROM CHINA AND OTHER SUPERPOWERS. I DON ' T THINK IT ' S EXCLUSIVELY CHINESE DRIVEN. IF YOU LOOK AT THE BELT AND ROAD, CHINA ENCOURAGES THEIR MARKETS TO SUPPORT THE BELT AND ROAD INITIATIVE. IT ' S NOT JUST CHINA FOR CHINA. HASLINDA: IT DOES SEEM THAT COUNTRIES LIKE SINGAPORE HAVE JUMPED ONTO THE BANDWAGON. IT ' S TYING UP WITH CHINA TO OFFER SERVICES IN THEIR BELT AND ROAD INITIATIVE. WHAT DO YOU MAKE OF THAT? DO YOU SEE OTHER COUNTRIES COMING ABOARD? MAHAMOUD: FOR THE BELT AND ROAD INITIATIVE, WE WILL SEE HOW ALL OF THE COUNTRIES WILL BENEFIT FROM EACH OTHER. WE SEE CHINA IS CURRENTLY TRYING TO EXPORT ITS PRODUCTS TO ALL OF THESE MARKETS. ALSO TO SUPPORT THE ECONOMIC TRAINING. -- TRADING. IF WE MADE THE ASSUMPTION THAT THE BELT AND ROAD INITIATIVE, IT WOULD BE BETTER TO BE PART OF THE INITIATIVE. MARKETS LIKE SINGAPORE TAKE THE BANDWAGON TO BENEFIT FROM THE DEMAND BY OFFERING SERVICES THAT COULD BENEFIT THE BELT AND ROAD COUNTRIES. THE INITIATIVE IS STILL IN PROGRESS. FOR NOW, IT IS NOT A CLEAR ADVANTAGE BETWEEN MARKETS. ALL OF THEM ARE TRYING TO FIND THEIR OWN ADVANTAGE. EMERGING MARKETS ARE TRYING TO FIND A DEMAND IN CHINA. YOU HAVE OTHER MARKETS, LIKE

No schedule data available.

BTV Channel FinderWatch BTV in your area

China's Belt and Road Initiative: 5 Years Later

Mahamoud Islam, senior economist for APAC at Euler Hermes, discusses China's Belt & Road initiative and what has been accomplished in the five years since its launch. He speaks on "Bloomberg Markets: Asia." (Source: Bloomberg)

More From Bloomberg Markets
All episodes and clips

The David Rubenstein Show
The David Rubenstein Show: Peer-to-Peer Conversations" explores successful leadership through the personal and professional choices of the most influential people in business.
More episodes and clips