OREANDA-NEWS. August 23, 2013. Recently China Financial Publishing House published History of China Development Bank, a kind of authoritative readings for financial industry professionals and readers from other fields to have all-round understanding of China Development Bank (hereinafter "CDB"). Reading between the lines of this 500+-page History of China Development Bank, I am acquainted myself with panoramic understanding of the Bank prefixed with "China".

Epitome of reforms to medium to long term investment /financing mechanism
As a product of China's campaign in investment/financing mechanism and financial system reform, CDB, since its establishment, particularly since 1998, has rigorously explored the viability of serving the national development strategies via market-based approach, and blazed a trail of unique development-oriented finance growth incorporating China practice into globally advanced financial theories. In other words, History of China Development Bank represents a history of exploring China's reform to medium to long term investment/financing mechanism.

To retrospect, CDB, in about 20 years of practices, in general has undergone three stages: first stage is from 1994 to 1998, when the Bank was running and operating in accordance with traditional banking model. CDB in this stage was held liable for ensuring funding supports to buttress key State projects and avoid blind expansion of infrastructure which may trigger inflation.

The Bank concentrated funding supports to large/medium/small sized capital construction projects and key technical transformation projects in infrastructure, basic and pillar industries, thus alleviating economic growth bottleneck constraints. Second stage is from 1998 to 2008 when the Bank got out of traditional model and proactively advanced market-based reformation to probe into the practice of development-oriented finance with Chinese characteristic. CDB, under the leadership of new Party Committee led by Mr. Chen Yuan, gradually established a grand-scale market based operation mechanism starting from efforts to liberalize debt offering and credit system reforms in the endeavors to think out of the box. The Bank tried to strike a balance between growth and risk prevention. Proactive efforts were made to strongly support the development of focal areas and areas of weakness, and expanding business scope from traditional "infrastructure, basic and pillar industry" to cover new areas involving people's livelihood as well as international cooperation.

With aforementioned actions, the Bank developed itself into a vibrant development-oriented financial institution which plays positive role in economic and social development process. Third stage is from 2008 to end of 2012, featured as deepening of development–oriented finance growth strategies, key of which is to build modern corporate governance mechanism. In the face of international financial crisis and domestic economic downturn, CDB, for one thing, put the reformation scheme approved by State Council under serious implementation, set up limited liability company and build "two under one" organization structure. For another, the Bank proactively tackled with impacts of international crisis, play medium to long term investment and financing mechanism to its strengths and advantages, and directed social funds to focus on growth, boost domestic demand, adjust economic structure, benefit people's livelihood and promote reformation, highlighting the important value of development-oriented financial institutions when serving the national strategies.

Irreplaceable Vital Force in Chinese Financial System
In its 20-year long developing process, CDB strives to explore efficient approaches for Finance sector to serve the national strategies, and made great contributions to boost healthy and sustainable economic growth and promote all-round social progress. In this sense, History of China Development Bank reveals how China has its finance sector to serve the national strategies.

For years, CDB has lived up to expectations and assigned missions by directing medium to long term funding and investments into key areas and key projects. The Bank poured more than 80% of its lending to "infrastructure, basic and pillar industries" such as coal, electricity, petroleum, transportation, forestry, agriculture, water, telecommunication and public utilities, and directed 60% lending to Midwest and old industrial bases in Northeast area, thus promoting the urbanization in China, driving sound interaction of industrialization with urbanization, and building stronger foundation to buttress economic growth.

With great passion, CDB launched inclusive financial guarantee in its efforts to improve people's livelihood and build a better society. The Bank strived to push for an inclusive financial system to be established to ensure fair and equal rights of fund raising for everyone. As of end of June 2013, the Bank has in total disbursed Rmb530b loans for government-subsidizing housing projects, more than 50% of total same kind of loan disbursements from all banks, covering 7m households or 21.95mn medium and low income population. Total disbursement of student loan amounted to Rmb42b, accounting for 80% of total, and supported 7.74m person times of cash-strapped students. Lending to SMEs stood at Rmb1.8trn, giving about 5 million new jobs. The practices and approach in CDB has won high appreciation of central leadership and broad recognition from all sectors of society.

CDB launched strategic initiatives globally to serve China's "Go-global" strategy on the back of international cooperation. The Bank successfully run key international cooperation projects such as Sino-Russia petroleum project, Sino-Brazil petroleum project and Sino-Turkmenistan gas project, and maintained security of China energy resources. CDB is in favor of enterprises "Go-global" strategy to approach international market, blaze a trail of self-dependent innovation and initiate a change to "created in China" from previous "made in China". The Bank also focused efforts on carrying out bilateral and multilateral financial cooperation, pushed for the set-up of Shanghai Cooperation Organization Inter-bank Association and China-ASEAN Interbank Association, and the establishment of BRICS inter-bank cooperation mechanism, which as important financial platforms for China to conduct regional economic cooperation with foreign countries, created win-win-wins.

In the meantime of serving national strategies, CDB has, step by step, added two new propellers to its traditional cutting edge, recorded and maintained outperformance versus its peers, and has become more of an irreplaceable role to play in the overall economic and social development and in financial system. Firstly it stands out as the bank offering biggest size medium to long term lending. It holds the leading position in terms of market share of RMB-denominated medium to long term credit facilities to none individuals, which is recorded at 18.6% at end of May 2013. RMB-denominated medium to long term lending at CDB accounts for 93.9% of the total. By above means it has strongly supported the smooth running of real economy. Secondly it boasts as the biggest bond service bank.

To date it has offered a total size of Rmb8.86trn financial bonds, with Rmb5.6trn bond outstanding. Financial bonds issued by CDB, the biggest financial bond issuer in China, have been proved good performing receiving well subscription and proper employment. Also it drives for innovation in China bond market, and builds diversified financial ecology, thus boosting financial system stability. Thirdly it is the biggest bank in terms of investment/financing with foreign countries. It proactively serves the holistic deployment of national security and development strategies, and strives for mutual benefit and common development with partner countries.

By end of June, its foreign exchange loan balance totaled USD262.4b, ranked on the top in market share, enabling it, as financial engine for China to implement "Go-global" strategy, to demonstrate Chinese financial power in international arena. Fourth, it is the biggest development-oriented financial institution, and as the bridge between the government and the market, it builds a matured market commercially sustainable for development areas beyond the reach of public finance where commercial funds are deterred from participation, and pushes development-oriented finance to play its role in a broader platform. As of end of June, asset size of the Bank is totaled USD1.26trn, a leading position in global development-oriented financial institutions.

CDB Building Strengths in Six Aspects during its Development
CDB, in its efforts to explore and practice development-oriented finance, takes steps to build advantages from its unique services, which is not only the key for CDB to boost confidence and gather strength, but also important guaranty for CDB to win in the competition, to win the future via proactive efforts, and to post sustainable growth. As we can reckon from History of China Development Bank, CDB has built unique "strengths in six aspects" compared with its peer competitors.

Wholesale service: not huge number in fund applications but with huge amount per single application. The bank far outperformed industry average in terms of per capita asset size and profit level.

Planning ahead: As early as 2003, CDB prompted "planning ahead" conception, based on which the Bank formed consensus with all stakeholders from broadest coverage of fields via intensified efforts on financial cooperation.

Innovation: CDB has demonstrated innovation concepts and entailed innovation thinking in every development stage and every action taken, from the proposal of development-oriented finance concept to efforts to drive for market-based operation, and to the fine-tuning of internal operating mechanism and service functions.

Diverse undertaking: the bank forms a diverse undertaking structure whereby medium to long term lending is the main undertaking to boost the growth of investment, bond, leading and investment banking services in well-organized approach. With diversified financial services, business synergy effect begins to shape up in CDB.

Risk control: the Bank establishes scientific-approach credit approval system and formed well-organized and efficient risk control and supervision mechanism to ensure sound implementation of risk management measures. As a result, its NPL rate has been kept within 1% for 33 consecutive quarters.

Talent force: CDB is building itself as "a learning bank, a bank of experts and a bank of managers". The Bank cherishes its good-quality manager team force and excellent professional talent team force, as this is the primary resources and valuable assets to guarantee sustainable growth of the Bank.

History is the best reference for compiling a textbook. In face of the new situation and new requirements, CDB will turn to history as a guide and draw experience and lessons from history. The Bank will seize strategic opportunities and rigorously support key areas and areas of weakness in China to fully play its strength and advantage as a leading medium to-long term lender so as to deepen reform and transformation. The Bank will also make intensified efforts to effectively control risks, enhance corporate value and compose a new chapter for serving national strategies, thus making great contributions to building a well-off society and bringing about great rejuvenation of the Chinese nation.