Luxembourg supports China's Belt and Road Initiative

Luxembourg's Prime Minister Xavier Bettel is in favour of China's Belt and Road Initiative (BRI), a comprehensive trade proposal that aims to create the world's largest economic platform.

In an interview with Chinese press agency Xinhua, Bettel praised the initiative and argued that "transport goes in both directions" which makes it possible to create "win-win situations".

Proposed by Chinese President Xi Jinping in 2013, BRI seeks to build trade and infrastructure networks between Asia, Europe and Africa along the ancient Silk Road trade routes.

The initiative advocates for lower non-tariff barriers, improved transparency of technical trade measures and enhanced trade liberalisation, among others. It involves China underwriting billions of dollars of infrastructure investment.

Win-win situation

Amid a rising protectionist tendency against Chinese investment in Europe, Bettel told Xinhua that the two sides "need each other" and "have to agree to do something that will satisfy both parties, something that will benefit the one and the other, without it being at the cost of the other."

Luxembourg's Prime Minister also advocated for more dialogue and cooperation.

"We need international trade and exchange, and I think that it is through understanding and respect for one and the other that we can move forward," he said.

Bettel visited China in June to discuss closer business ties between the two states and start new partnerships in the fields of politics, finance, economics and culture.

He outlined that during his visit "four agreements were signed" and said that the Sino-Luxembourg partnership is based on "a relationship of trust that exists."

This year marks the 45th anniversary of Luxembourg-Chinese diplomatic relations which officially began on November 16, 1972.

About the Belt and Road initiative

Chinese authorities hosted the Belt and Road Summit in Beijing last May, reuniting 30 world leaders and representatives from 57 countries. A second summit on the initiative will be held in 2019.

However, a number of countries, including India, are opposing the initiative, wondering whether any hegemonistic designs are hidden behind China's plan to foster greater international connectivity and trade.

If launched, BRI would tie in perfectly with the long-term strategy to reinforce trade and business relations between Luxembourg and China.

According to a 2016 report by Deloitte, Luxembourg has progressively gained recognition as a key hub for cross-border renminbi (RMB) in the eurozone and for its Chinese-friendly regulatory and government environment.

Luxembourg attractive for Chinese investors

The Grand-Duchy is the second largest global domicile of investment funds investing into mainland China. It is the largest listing centre in Europe for Dim Sum bonds -- bonds issued outside of China but denominated in renminbi -- and second globally behind Hong Kong.

The Grand-Duchy is also the leading European RMB and Renminbi Qualified Foreign Institutional Investor (RQFII) centres and home to seven major Chinese banks.

According to the Deloitte report, Luxembourg-China relationships will continue to strengthen "to the mutual benefit of their respective economies."

At the end of September, a delegation led by Finance Minster Pierre Gramegna will travel to Beijing and Shanghai to promote Luxembourg's financial centre to Chinese businesses.

(Roxana Mironescu, roxana.mironescu@wort.lu, +325 49 93 748)