• Thu
  • Jul 24, 2014
  • Updated: 11:51am

China's exim bank more than a symbol

PUBLISHED : Saturday, 25 June, 1994, 12:00am
UPDATED : Saturday, 25 June, 1994, 12:00am

THE official opening of the China Import-Export Bank next Friday will be important in more than merely symbolic terms.


Everyone knows that state enterprises in China are forever reeling as credit is squeezed and relaxed. Triangular debt within China between different enterprises also causes havoc.


Exim cash will soon be available to support key areas of China's industrial and commercial relations with the outside world.


In the West, the use of exim funds to help foreign customers buy products is well established and has been a particular feature in the export of high-value capital equipment.


The opening of China's own exim bank shows the changes 15 years of liberalisation have wrought. China now needs to provide funding to those buying its products.


One of the first projects slated to get support to the tune of 500 million yuan (about HK$445 million) is the launch of APT Satellite.


The satellite is being built by a US contractor and APT has presumably achieved its own deal with American export credits to help at that end of the deal.


But now China has signalled that the new bank will stump up cash for the rocket and launch.


China is also set to export a ship to Norway on the back of an export credit.


As much of China's development has been either small-scale industry powered by Hong Kong and Taiwanese entrepreneurs, or joint-venture developments with multinational corporations which sell most equipment in China, it is not surprising China has not had such a bank before.


The fact that it will have an exim bank from July 12 marks the next step of integration into the world economic system and should help China's industries compete on the world stage.


However, the bank is funded entirely in yuan. It has enough of them: 3.38 billion yuan is the initial capital and more is to be borrowed with the issue of a three-year bond.


But in export markets, China must be more interested in getting hard currency for its product.


Will the new bank act as a helper to enterprises, or will it stand between enterprises and their foreign customers and take hard currency and hand on yuan?

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