The Release Conference of 2017 Report on Index and Assessment of Political Risks of Energy Investment in “Belt and Road” Initiative

On January 15, release conference of the 2017 Report on Assessment of Political Risks of Energy Investment in the “Belt and Road” Initiative and “RUC Energy Investment Political Risk Index (RUCIEIPRI)” was held at Yifu Building. The report and RUCIEIPRI were completed by the project team led by Prof. Xu Qinhua, Deputy Director of Research Center for Energy and Resource Strategy, National Academy of Development and Strategy, Renmin University of China (RUC). The conference was organized by National Academy of Development and Strategy, RUC. Present were more than 100 people, including experts from China International Institute for Strategic Society, National Center for Climate Change Strategy and International Cooperation (NCSC), China National Petroleum Corporation (CNPC), China National Offshore Oil Corporation (CNOOC) and RUC as well as those from all sectors of society and the media. The conference was presided over by Prof. Xu Qinhua.

Based on index research findings in 2016, the report further perfects RUCIEIPRI rating system, colligates six dimensions such as economic base, social risks, political risks, China factor, energy factor and environmental risks and 37 sub-indexes, and refers to 11 large global databases, so as to comprehensively quantify and assess political risks in energy investment by Chinese enterprises in 64 countries along the “Belt and Road” and main reasons for change.

Risk assessment results show that among these countries along the “Belt and Road”, there are 2 countries with low risks, 14 countries with comparatively lower risks, 30 countries with medium risks, 14 countries with comparatively higher risks and 4 countries with high risks. Compared with assessment results of 2016, 2017 results show a general trend of more countries with high and comparatively higher risks and less countries with low and comparatively lower risks. Among these countries, South Asia, West Asia, North Africa and the Common Wealth of Independent States remain regions with comparatively higher risks; Russia becomes a country with medium risks, showing an increase of risk while risk rating of Central Asia remains the same as in the 2016 report. The report believes that significant devaluation of the euro, economic sanctions imposed by Europe and the US on Russia and continuous drop in international oil price are important reasons for change in risk rating.

Prof. Long Yonghong, Director of Academic Affairs Office, RUC, pointed out in the speech that the release of the report and index was also an important part of RUC’s educational reform. It is an important direction of RUC’s educational reform to combine scientific research and teaching and carry out problem-oriented interaction between teaching and learning. The team led by Prof. Xu has long adhered to this direction, which is worth advocating and encouraging. The team relies on the educational reform course of “Introduction to International Energy, Environment and Climate”, which plays a leading role in cultivating academic talents and making innovation in teaching methods.

Prof. Xu Qinhua said in the speech that energy cooperation was an important part of the “Belt and Road” Initiative of China. Attention should be paid to political risks when making energy investment in the “Belt and Road” region. RUCIEIPRI is an effective approach to correctly view political risks in the “Belt and Road” region. Compared with the 2016 one, 2017 index presents further improvement of dimensions such as sub-indexes and environmental risks, so that assessment results can more truly reflect the current situation.

Major General Wang Haiyun, Senior Advisor of China International Institute for Strategic Society, pointed out in his comments that the assessment report is of great significance to promotion of the “Belt and Road” Initiative. Political risks of energy investment are very important. RUC can make theoretical innovation on this basis, so as to facilitate discipline construction of energy politics in China.

Prof. Fang Changping, Associate Dean of School of International Studies, RUC, pointed out that the assessment report could withstand the test of practice and played a certain role in guiding energy investment in the “Belt and Road” Initiative. Prof. Xu Jiabin from School of Business, RUC pointed out that energy has both political and economic significance to national strategy. The assessment report politically emphasizes, at the right time, the important role of energy in the implementation of the “Belt and Road” Initiative. Mr. Yan Jiantao, former Chief Oil and Gas Analyst of Goldman Sachs, provided four suggestions for practicability and brand extension of the assessment report and RUCIEIPRI. He stressed that the dimension of China factor represented a major innovation of RUCIEIPRI, on the basis of which assessment of the influence of Chinese culture, language and customs on the “Belt and Road” region could be added and attempts could be made to assess the risk level of China.

Mr. Hu Senlin, Director of Investigation and Survey Division, CNOOC, pointed out that the assessment report had a good stance and a strong guiding significance. RUCIEIPRI is innovative in respect of framework design and index selection. Political risks reflected in the assessment report are highly correlated to underlying geopolitical problems in the “Belt and Road” region. The government and enterprises should have a comprehensive understanding of and objectively evaluate political risks in the region, and build necessary early warning and management mechanisms. Mr. Liu Qiang, Director of Strategic Planning Department of NCSC, believed that the assessment report was timely, comprehensive and practical. The addition of the climate dimension in RUCIEIPRI conforms to the current global trend of the combination of energy and climate issues. Climate negotiations are political negotiations and some interest groups have great influence on climate policies of a country, which may be considered in future index design. Research Fellow Lu Ruquan at Center for International Energy and Environment Strategy Studies, RUC pointed out that the assessment report and index design showed academic depth, the breadth of six dimensions and strategic height. He suggested that efforts should be made to combine the content of future assessment reports with “policy coordination, facilities connectivity, unimpeded trade, financial integration and people-to-people bonds” of the “Belt and Road” Initiative, quantify assessment results and indicate specific effects of risks on energy investment, so as to provide important guidance for enterprises.

Cai Lin, a member of the project team and Associate Professor at School of Sociology and Population Studies, RUC, and Liu Xu, Executive Director of Center for International Energy and Environment Strategy Studies, RUC, each delivered a speech on the methods of index design and assessment and assessment results respectively.