OREANDA-NEWS. April 04, 2013. The China Development Bank (CDB) signed a financing framework cooperation agreement with the Ministry of Economic Affairs of Belarus in Beijing. Under the agreement, CDB will support investments by Chinese enterprises in Belarus, the "land of 10,000 lakes", in the form of "intellectual support as well as financial support" to upgrade the level of bilateral economic and trade cooperation.

Two weeks earlier in Xi'an, CDB signed "going out" financial cooperation agreements totaling USD 16 billion with six enterprises including China Railway 20th Bureau Group Corporation and China Water Conservancy and Hydropower Third Engineering Bureau to provide them a full range of financial services in overseas engineering contracting, overseas mergers and acquisitions, and direct investment.

These are but two examples of CDB engaging in international cooperation to serve the national strategy of "going out". As China's largest bank for external investment and financing cooperation, CDB has over the years vigorously promoted multilateral and bilateral financial cooperation to help Chinese enterprises "go out". As of the end of 2012, CDB has issued a cumulative total of USD 270 billion of loans for international cooperation with a foreign currency lending balance of USD 248.2 billion. With its international cooperation business covering 113 countries and regions around the world, CDB has achieved mutual benefit and a win-win outcome for common development with its cooperation partners.

Multilateral financial cooperation gets better and better
In New Delhi, India, on 29 March 2012, under the witness of the leaders of the BRICS member states, CDB -- along with Brazil's BNDES, Russia's Vnesheconombank, the Ex-Im Bank of India, and the Development Bank of Southern Africa (DBSA) -- signed the Master Agreement on Extending Credit Facility in Local Currency and the BRICS Multilateral Letter of Credit Confirmation Facility Agreement.

That was one of the major results of the fourth BRICS summit meeting and was also the third time for the five banks to sign financial cooperation agreements under the witness of BRICS leaders. According to the agreements, the five banks will steadily expand their local currency settlement and lending business to facilitate intra-BRICS trade and investment.

CDB Chairman Chen Yuan said that these two agreements, as important outcome documents for the year's BRICS summit, bear far-reaching significance in deepening financial cooperation among BRICS member states. The chairman of Vnesheconombank said the two agreements will assist in promoting bilateral trade and investment among BRICS states and will further expand trade cooperation among them. The chairman of DBSA said the two agreements will help ensure that trade among BRICS states will be conducted in a relatively stable environment so as to effectively reduce the risks.

"CDB's intention and purpose for multilateral financial cooperation is to promote bilateral and multilateral economic cooperation among developing countries and the emerging market countries, promote common development between China and those countries, and ultimately push forward the establishment of a fair, just, inclusive, and orderly new world economic and financial order," said Chen Yuan.

In addition to BRICS, CDB has also played a bridging and linking role in the China-ASEAN and SCO regional cooperation. In May 2012, the second council meeting of the China-ASEAN Interbank Association was held in Beijing. At the meeting member banks signed the Supplemental Agreement on China-ASEAN Interbank Association Cooperation, which enhanced the Association's management mode and operating framework and established good support for close cooperation among member banks. CDB's important role within the Association has won appreciation and recognition from the other member banks.

A month later, the eighth council meeting of the SCO Interbank Association was also held in Beijing. The six member banks discussed deepening multilateral financial cooperation at the meeting and issued an initiative on sustainable development to jointly call for performing social responsibility, supporting the "green economy", and making new contributions to the sustainable economic and social development in the member countries.

As a founding bank of the SCO Interbank Association, CDB has become the largest in terms of lending as well as the most active member bank. As of the end of 2012, CDB's lending balance in SCO member states stood at USD 39.9 billion, covering energy, infrastructure, transportation, communications, agriculture, trade and other fields. They include major projects such as China-Russian oil cooperation and the Central Asian natural gas pipeline, and people's livelihood related projects and innovative projects such as SME and agricultural lending and offshore RMB lending.

CDB has also made fruitful achievements in bilateral financial cooperation. In the past two years, to help Chinese shipbuilding and shipping enterprises cope with the international financial crisis, CDB has pushed forward high-level government cooperation with financing by separately setting up and exclusively sponsoring the USD 5 billion China-Greece and EUR 5 billion China-Germany shipping development special funds to serve multiple segments in the shipping industry.

In Latin America, the huge demand in railways, highways, deep-water ports, and hydropower stations have provided rare opportunities for Chinese enterprises. In 2012, CDB took the initiative to set up a USD 10 billion Latin American infrastructure special credit facility to lay the financial foundation for cooperation in infrastructure construction between Chinese enterprises and Latin American countries.

Mutually beneficial cooperation has bright prospects. In fact, whether it is the cooperation mechanism among BRICS banks or shipping and infrastructure funds and lending, it is an evitable choice for member states to solve their own development issues as well as an example of CDB's dedication to exploring mutual benefit and a win-win outcome for international cooperation. Over the years, through joint credit facilities, currency swaps, and joint lending, CDB has carried out close cooperation with nearly 100 regional and sub-regional financial institutions, and partner countries' central banks, developmental financial institutions, and major commercial banks. Multilateral and bilateral financial cooperation has increasingly become a bright spot in CDB's international cooperation business.

Strong cooperation with Africa
"Africa's development is an opportunity for China as well as for Africa," said Chairman Zuma of the African Union during a visit to China. He said China is an important strategic cooperation partner for Africa, and Africa hopes to learn from the successful experience in China's development and strengthen exchanges and cooperation.

As respectively the biggest developing country and the largest developing bloc of countries in the world, China and Africa strengthening unity and cooperation is not only of great significance to themselves but also to the promotion of world peace, stability and development. CDB President Zheng Zhijie said Africa has for a long time been one of the key regions for CDB's international cooperation business. Through cooperation with various African governments, financial cooperation, and bank-enterprise cooperation, CDB has actively promoted practical cooperation between China and Africa in infrastructure, resource development, agriculture, manufacturing, and people's livelihood to help African countries improve their ability in independent and sustainable development. As of the end of 2012, CDB's African lending balance amounted to USD 16.1 billion.

Sponsored by the Ministry of Commerce and the China Council for the Promotion of International Trade and co-sponsored by CDB and the African Chamber of Commerce and Industry Alliance, the fourth China-Africa Business Conference was held in Beijing in July 2012. Nearly 300 enterprises attended the entrepreneurial meeting and over 20 signed eight investment and financing and economic cooperation agreements (three of which involving CDB). At the meeting CDB and relevant parties jointly issued a "China-Africa Business Conference -- Chinese Corporate Social Responsibility Declaration" vowing to continue to push forward exchanges, cooperation, and mutual support and trust among businesses.

In the process of "going into Africa", CDB has in recent years developed two specialty "business cards", namely the China-Africa Development Fund and the dedicated African SME development lending, both exclusively initiated by CDB with the aim of implementing China's commitment to Africa under the framework of the Forum on China-Africa Cooperation.

In January 2012, USD 50 million funds were put in place for CDB's
SME credit facility to Equity Bank Kenya. The two sides also signed another agreement for a USD 80 million SME credit facility during the China-Africa Business Conference held in Beijing in July. Kenya's minister for trade and industry said that, by supporting Kenya's SME development, CDB has made a tremendous contribution to the country's social stability, economic prosperity, increasing employment, eradication of starvation, and poverty alleviation.

Egypt's Wangqi Lighting Company, located in the SME park of the Suez Economy and Trade Cooperation Zone, is an enterprise mainly in the business of manufacturing energy-saving lamps. The company's manager told the reporter that it encountered cash flow problem during its early development stage, and it was a USD 1 million loan from CDB that helped tide it over. Wangqi has since enjoyed booming business and is now employing over 200 local employees.

By the end of 2012, CDB has committed USD 1,213 million in dedicated African SME loans. By supporting local African SMEs through direct or follow-on lending, CDB has directly created 22,000 jobs and indirectly benefited over 400,000 farming households.

Another characteristic of CDB's financial service for Africa is the interaction between CDB and its subsidiary China-Africa Development Fund. The Fund, an important measure for implementing China's commitment to Africa, signed a cooperation agreement for two African investment projects at the fourth China-Africa Business Conference. China-Africa Development Fund joined hands with Ghana's SAS Finance Group, Ghana's Social Security and National Insurance Trust (SSNIT), and China's Hainan Airlines in investing in the Africa World Airlines (AWA), the only local budget airline in Ghana and West Africa. Shortly after its founding, AWA successfully accomplished the mission of operating a chartered flight for Liberian President Ellen Johnson-Sirleaf.

It is rare the world over for such a young airline to be entrusted with the task of operating a chartered flight for a head of state, demonstrating the obvious trust the Ghanaian government has in AWA. After President Sirleaf disembarked, he specially posed for photos with AWA crew members. Ghanaian officials who participated in the mission said China-Africa Development Fund and China's airline have helped them establish Ghana's own brand, and they expressed the hope that the AWA brand will be promoted throughout West Africa.

Also in Ghana, Bo'en Power Plant, a joint investment by Shenzhen Energy and China-Africa Development Fund, is located on the coast of the Gulf of Guinea. Since it became operational in October 2010, the power plant has provided 15% of the total electricity consumption in Ghana, and this percentage will further rise as its phase-two 360 MW project is near completion. Ghana's power use restrictions have become history.

By the end of 2012, China-Africa Development Fund has had a cumulative total of 61 investment projects involving over USD 2 billion and covering 30 African countries. Full implementation of these projects will lead to over USD 10 billion of investment in Africa and will increase local foreign exchange export income by USD 2 billion and tax revenue by USD 1 billion per year, bringing direct benefits to 700,000 people.

In July 2012, the Chinese Academy of Social Sciences and the Ministry of Culture issued the "African Development Report (2011-2012)", which points out that CDB and its subsidiary China-Africa Development Fund have, on the basis of equality, mutual benefit, and common development, strengthened China-Africa cooperation and diligently improved the quality of the cooperation to the benefit of African countries. This is a testimony both to our care for the traditional China-African friendship and to the fact that China is Africa's "reliable friend" and "sincere partner".

A financial pillar for supporting enterprise "going out"
As a leading enterprise in the domestic polyester fiber industry, Jiangsu-based Sanfangxiang Group has long set its sights on the international market. In 2011 the company "went out" to Singapore to test the water, but it encountered a shortage of funds. In October 2012 CDB issued a "foreign trade closed loan" of USD 1 billion to the company to help it consolidate collaborative procurement and unify export sales. The company's chairman Bian Pinggang said, "Thanks to CDB's support, our Singapore branch was able to gradually assume the role of a vanguard for the group's import business and became a core platform of our overseas trade."

Since it launched its international cooperation business in 2005, CDB has always been a financial pillar for supporting Chinese enterprises "going out". In the past year, more and more export-oriented Chinese enterprises are feeling the power of developmental finance in this kind of bank-enterprise cooperation.

In the traditional steel industry, in July 2012 CDB and Baosteel Group signed a comprehensive strategic cooperation agreement involving USD 20 billion to support Baosteel's "going out" project. It has been said to be a new measure in the new strategic cooperation partnership between large business groups and large financial institutions, which is conducive to improving the international competitiveness of not just Baosteel but also the Chinese steel industry.

In the field of clean energy, in 2012 CDB financed Sinovel Wind Group's 34.5 MW wind power project in Brazil. That was Sinovel's first Latin American project that received funding from a Chinese bank. As a leading domestic wind power generation equipment manufacturer, Sinovel's "going out" not only pushed forward the development of China's clean energy industry but also brought external funds and technology to Brazilian wind power enterprises and developed Brazil's new energy industry by optimizing industrial upgrading.

In the field of high and new technology industries, CDB signed a new round of "Strategic Cooperation Agreement on Developmental Finance" with ZTE in Beijing in December 2012. This was the third round of bilateral cooperation following the first two rounds in 2005 and 2009. Under the agreement, the two sides will be in financing cooperation involving a total credit line of USD 20 billion during the following five years. CDB will bring into play its comprehensive financial service advantages in investment, lending, debt, leasing and securities to help ZTE steadily expand its overseas markets. ZTE officials said that, amid a general downturn in global telecom operation and manufacturing, CDB's support is truly timely help for ZTE to adjust its development strategy, seize market opportunities, and achieve its strategic goal of becoming an enterprise that excels.

While giving play to its own advantage to help enterprises "go out", CDB has also actively led banking and public funds in providing strong support to enterprises in their international cooperation business. In August 2012 CDB signed a "Cooperation Agreement on Serving Enterprises That 'Go Out'" with the Agricultural Bank of China (ABC). The two banks will join hands in providing outstanding comprehensive financial service to enterprises that "go out", covering enterprises' business, syndicated lending, settlement, trade finance, clearing, cash management, custody and other areas. Financial experts said CDB has a broader and more strategic vision in international cooperation while ABC has the advantages in its abundance of funds and domestic branch network, so the two banks' cooperation in improving resource sharing, offering each other complementary advantages, and strengthening cooperation will enhance the financial service industry's ability to serve the national strategy of "going out".

As is well known, compared with domestic projects, financing overseas projects carries more risks. In order for Chinese enterprises to not only "go out" but also "go safely" and "go far", CDB has continually innovated its model for financing overseas projects, helped enterprises improve their ability to manage risks, and achieved mutual benefit between Chinese enterprises and all parties in the countries of cooperation.

Take the example of overseas mining projects, for instance. Banks are usually quite cautious about those projects. Against this backdrop, Kaiyuan Mining, which was developing the Laotian market, came to CDB to request a loan to meet its pressing funding need for a new project in Laos. By proposing a carefully tailored credit structure in conjunction with the company's operating conditions, CDB has achieved a win-win outcome for both the company and for its own risk management. In October 2012 Kaiyuan's Laotian potassium chloride project with annual production capacity of 500,000 tonnes was put into use for the first time, thereby improving the Laotian domestic mining and intensive processing capability to a new level.

Overseas project financing usually involves relatively large sums of money, so syndicated lending is a means for meeting the financing needs of the enterprises while effectively managing risks. Let's still take the Sanfangxiang Group as an example. In the second half of 2012, the group planned to take advantage of international market opportunities at the time to launch three new projects including polyester filament in order to eliminate backward production capacity, reduce energy consumption, and improve large-scale production. However, the funding for the three projects would require an estimated total of 6 billion yuan, of which the polyester filament project alone would require nearly 3 billion yuan. "Luckily we had support from CDB," said Bian Pinggang, chairman of the group. CDB specially led a syndicated loan of 1.8 billion yuan, of which CDB took a share of 800 million yuan. Sanfangxiang has used the funds to buy cutting-edge equipment and technology, and the project will kick off soon.

In addition, Dongfang Electric Corporation's Jiajia coal-fired power station project in India has also received support from developmental finance. CDB led a syndicate of five banks in providing the project with a loan of USD 288 million, which has ensured the smooth progress of India's largest foreign power station project that will ease the power shortage in the South Asian country.

International cooperation brings mutual benefit and a win-win outcome. CDB Chairman Chen Yuan said that, in the process of carrying out its international cooperation business, CDB will always vigorously support major infrastructure and people's livelihood projects that are of concern to the countries of cooperation, and will always put store on strengthening the countries' ability in independent and sustainable development so as to achieve common development between China and its foreign partners and make greater contributions to building a harmonious world.