Research On The Financial Cooperation And Its Effects Between China And Countries Jointly Building The Belt And Road Initiative

With the increasing trend of global economic integration,and financial globalization and regional currency internationalization are developing rapidly.The global financial crisis in 2008 made many governments around the world to seek effective regional financial cooperation as a channel to deal with and resolve the financial crisis,thus providing an important opportunity for regional financial cooperation and its further development.As a new mechanism for international and regional economic cooperation that is open,inclusive and beneficial to all,the Belt and Road is not only a legacy of China’s ancient Silk Road,but also an expansion and innovation of the existing cooperation mechanisms between China and ASEAN,China and Central and Eastern Europe.The report of the 20 th National Congress of the Communist Party of China pointed out that "jointly building the Belt and Road has become a popular international public good and a platform for international cooperation." With the deepening of economic and trade cooperation between China and countries jointly building the Belt and Road initiative,higher level of financial cooperation is required.Relevant Chinese departments have also issued relevant policy documents to promote financial cooperation and financing between China and countries jointly building the Belt and Road initiative.It is not difficult to see that China’s unswerving orientation and belief in deepening financial cooperation and promoting the Belt and Road Initiative.It has been 10 years since the Belt and Road Initiative was proposed.What is the real level of financial cooperation between China and countries jointly building the Belt and Road initiative? What are the effects of China’s financial cooperation with countries jointly building the Belt and Road initiative? Against the backdrop of unprecedented changes in a century and the complex interweaving of the post-pandemic era,how can we further promote the development of financial cooperation between China and countries jointly building the Belt and Road initiative? Centering on the above issues,this paper conducts a systematic study on the financial cooperation between China and countries jointly building the Belt and Road initiative and its effects.The main work and conclusions of this study focus on the following aspects:First,related literature,concept and theory of financial cooperation and its effects are elaborated,and on this basis,theoretical framework construction is carried out to provide theoretical support for subsequent research.Summarize the current academic research on regional financial cooperation,the "Belt and Road" financial cooperation and the effects of financial cooperation,clarify the connotation and research scope of financial cooperation in this paper,and construct the theoretical basis with the theory of optimal currency area and others.From the overall framework,financial cooperation includes monetary cooperation,financial institutions cooperation and other five ways,based on different research perspectives or modes of action,we should build an impact mechanism that conforms to the effects of economic growth,financial stability and RMB Internationalization.From the perspective of action mechanism,the five financial cooperation modes promote each effect through different action mechanisms,which complement each other in theory and form a unified whole.Second,it analyzes the practical basis and mode of financial cooperation between China and countries jointly building the Belt and Road initiative.Based on the practical basis of financial cooperation,it is necessary for China to carry out financial cooperation with countries jointly building the Belt and Road initiative based on the needs of promoting economic growth,maintaining financial stability and promoting the internationalization of RMB in an orderly manner.By examining the economic and financial basis of China and the countries along the route,it is found that the gradually deepening economic and trade exchanges provide favorable conditions for financial cooperation.Further empirical measurement of the Optimal Currency area(OCA)index of financial cooperation between China and countries along the route shows that after the "the Belt and Road" initiative was put forward,the decline of the OCA index was particularly obvious,and the feasibility was significantly improved.At the same time,the cost of financial cooperation between China and different regions along the route was quite different.At the level of financial cooperation,the scope and depth of financial cooperation between China and countries jointly building the Belt and Road initiative,as well as existing challenges,will be explored from five aspects: development finance and investment and financing cooperation,monetary cooperation,financial institution cooperation,capital market cooperation and financial regulatory cooperation.Third,the evaluation index system of financial cooperation between China and countries jointly building the Belt and Road initiative is constructed,and the combined empowerment method of entropy weight method and analytic hierarchy process is used to make a quantitative analysis of the level of financial cooperation.According to the research results,from the time dimension,the financial cooperation index shows a fluctuating upward trend.After the "the Belt and Road" initiative was put forward,the increase is more obvious.During the entire sample period,the financial cooperation index increased from 0.1201 to 0.2963,with an average annual growth rate of about 7%;From a spatial perspective,there is significant heterogeneity in geographical regions.The ranking of China’s financial cooperation index with different regions along the route from high to low is: Southeast Asia,Northeast Asia,West Asia and North Africa,South Asia,Central and Eastern Europe,and Central Asia.Among them,Singapore,Russia,the United Arab Emirates,India,Hungary,and Kazakhstan are leading countries in each region.Fourth,the economic growth effect of China’s financial cooperation with countries jointly building the Belt and Road initiative.Based on the analysis of the influence mechanism of financial cooperation on economic growth,the spatial Durbin model under the three spatial weight matrices of adjacency matrix,economic distance matrix and inverse distance matrix is used to empirically test whether the financial cooperation between China and countries jointly building the Belt and Road initiative has a significant promoting effect on the economic growth of participating countries.The results show that,under the three spatial weight matrices,the coefficients of the financial cooperation index are all significantly positive,indicating that it plays a significant role in promoting economic growth.According to the decomposition results of the spatial effect,the coefficients of the financial cooperation index in the direct effect are still significantly positive under the three spatial weight matrices,which further proves the economic growth effect of financial cooperation.However,the indirect effect results show that there is still room for progress in the regional linkage of financial cooperation between China and countries jointly building the Belt and Road initiative.From the perspective of time heterogeneity,the implementation of the "the Belt and Road" initiative has contributed to the economic growth effect of financial cooperation.From the perspective of heterogeneity in financial openness,countries with high financial openness have a stronger driving effect on economic growth through financial cooperation.The empirical analysis results based on financial cooperation methods indicate that cooperation between financial institutions,capital markets,financial supervision,and currency cooperation have a significant positive impact on economic growth,while the role of development finance and investment and financing cooperation in economic growth is not significant.Fifth,the financial stability effect of China’s financial cooperation with countries jointly building the Belt and Road initiative.On the basis of an in-depth analysis of the mechanism by which financial cooperation affects financial stability,systematic GMM method is used to investigate the financial stability effects of financial cooperation between China and countries jointly building the Belt and Road initiative.The conclusions are as follows: financial cooperation has a positive promoting effect on financial stability,and there is regional heterogeneity and financial openness heterogeneity.According to the regression results of the financial cooperation methods,it can be seen that development finance and investment financing cooperation,monetary cooperation,capital market cooperation,and financial regulatory cooperation between China and countries jointly building the Belt and Road initiative have played a positive role in maintaining financial stability,while the impact of financial institution cooperation on financial stability is not significant.Sixth,the RMB internationalization effect of financial cooperation between China and countries jointly building the Belt and Road initiative.On the basis of exploring the impact mechanism of financial cooperation on RMB internationalization,systematic GMM model is used to verify the effect of financial cooperation between China and countries jointly building the Belt and Road initiative on RMB internationalization.The results showed that financial cooperation had a significant positive impact on RMB internationalization.Regarding the heterogeneity analysis of the Maritime and Land Silk Road,the internationalization effect of RMB in financial cooperation is mainly reflected in the countries along the Maritime Silk Road.From the perspective of regional heterogeneity,the financial cooperation between China and Asian countries participating in the Belt and Road Initiative has a significant promoting effect on the internationalization of RMB,but the financial cooperation between China and European countries along the Belt and Road has a weak influence on the internationalization of RMB.The empirical analysis results based on financial cooperation methods show that currency cooperation,financial institution cooperation and development finance and investment and financing cooperation have significant positive effects on RMB internationalization,while capital market cooperation and financial regulatory cooperation have no obvious effects on RMB internationalization.Based on the above research contents and conclusions,effective countermeasures and suggestions are put forward for development finance and investment and financing cooperation,monetary cooperation,financial institutions cooperation,capital market cooperation,financial supervision cooperation and the development of regional differentiation strategies,and financial cooperation between China and countries jointly building the Belt and Road initiative is promoted in a classified and hierarchical way to achieve more significant economic growth effects,financial stability effects and RMB internationalization effects.