This model can play a greater and more active role in the initiative and will help avoid various problems, such as the crowding out effect, moral hazard and market distortion. The construction of the Belt and Road could provide extra room of development to financial institutions, for them to open offshore branches and provide better financial services for trade, investment and capital management.
Indeed, it is fitting to talk of this ‘balancing act’ here, at the LSE as one of the examples Acemoglu and Robinson (2019) give in their book is the debate between Beveridge and Hayek over the development of the welfare state.