Finance and Environment

CHAIR: Andrew Lang, Chair of International Law and Global Governance, University of Edinburgh

Hong Kong as BRI’s financial hub: is it ready for ethical finance?
Marizah Minhat, Assistant Director, ICMGR, Napier University

In this study, ethical finance is viewed from Islamic perspective. Including Islamic perspective in this discourse is important because Belt and Road Initiative (BRI) involves many Muslim-majority countries in the Middle East, Central Asia, South Asia, and Southeast Asia. This study explores some of the challenges to developing Islamic finance in the Hong Kong Special Administrative Region of the People’s Republic of China (HKSAR). Exploring the progress of Islamic finance in this part of the world is important given Hong Kong’s aspiration as a financial hub for BRI, which is a natural extension of its present role as an international financial centre.

Shanghai Lingang: China’s newest and most important FTZ financed by the BRI- Can we create Green Pathways?
Ed Craig, Interim Executive Director, Edinburgh Centre for Carbon Innovation

This talk will focus on the development of Shanghai’s new free trade zone, which is expanded to include Lingang on the city’s southeast coast, where Tesla is building its first overseas factory and the world’s largest planetarium is under construction. Lingang, on the East China Sea, is a relatively new city, built as a modern example of international competitiveness and smart city technology. Can it grow through BRI to be a truly ‘sustainable’ economic achievement? It serves as a hub for cutting-edge science and technology, low carbon and intelligent manufacturing and the “Made in Shanghai” campaign.

It is also the location of the University of Edinburgh and Shanghai Jiaotong’s, Low Carbon College- a Hub for sustainable research, teaching and innovation. Earlier this year, Tesla founder Elon Musk was in Lingang to break ground for the company’s first overseas factory, the largest foreign funded manufacturing project yet built in Shanghai. The Tesla Shanghai Gigafactory will integrate research and development, manufacturing, sales, and other functions, with an annual production capacity of about 500,000 all-electric vehicles. To achieve our agreements through the Paris accord the world must act to work with key initiatives such as the BRI and economic powerhouses such as China to stem the production of harmful GHGs and the resulting planetary impacts. China’s CO2 emissions grew by 4% in the first 6 months of 2019 alone (Carbon Brief, September 2019) driven by a 3%, 6% and 12% increase in coal, oil and gas demand respectively driven by BRI projects.

Challenges and Solutions of Chinese Investment along the Belt and Road Initiatives in Mega Project Deliveries
Zhi Shengke, Director, Strategy and Development, Wood PLC

As businesses experience every day, markets and customer needs are changing rapidly. Chinese Belt and Road Initiative is identified as an external market movement that presents considerable opportunity for growth, differentiation and brand enhancement. The impact will be felt across existing Wood organizational boundaries. Wood has committed to work at the cutting edge of this change and help our Chinese customers to achieve the impossible. Chinese customers are looking for partners who work to understand their unique business drivers and respond with innovative solutions to solve their biggest challenges. Wood places strong focus on the delivery and innovation that supports the energy transition and urbanisation in the BRI region. A case study will be presented how Wood deployed the “Coal-to-Liquids” technology into China and BRI countries. A broad discussion will be focused on challenges and solutions during the delivery. We believe tomorrow’s BRI will lead the global trends of energy transition, urbanisation, digitalisation and future skills. Working with Chinese customers along the BRI regions will focus on how to standardize, optimize and digitize solutions in order to deliver consistent and predictable outcomes for our Chinese clients and recipient countries.

The Distributive Impacts of the Belt and Road Initiative
Wan Guanghua, Director, Institute of World Economy, Fudan University

The mission of the Belt and Road Initiative (BRI) is to achieve shared prosperity for all humankinds through cross-border trade, investment flows, connectivity, people bond and policy coordination. This paper will evaluate the distributive effects of trade and investment under the BRI by using income inequality (the Gini index) as an indicator of shared prosperity and conducting the difference-in-difference (DID) estimations. Preliminary estimation results show that the BRI has generated benign distributive impacts. The Gini estimates are significantly reduced after the implementation of the BRI. More interestingly, the benign effects became larger year by year. Further, the parallel trend test excludes possible endogeneity of the BRI. In particular, the BRI is found to have promoted imports from China to the participating countries. However, exports of BRI countries to China and OFDI from China are insignificant, suggesting that the benign distributive impacts come from imports from China. Further focusing on transmission mechanisms from imports from China to income inequality, we found that the imports of machinery and equipment are positively correlated with labor participation rate, thereby helping raise the labor share in national income and reduce income inequality. Also, the imports of foods and raw materials are found to be negatively correlated with the employment share in the primary industry. In other words, they help promote industrialization and urbanization in BRI economies which are expected to lead to better income distribution in the long run.