China Development Bank loans point to stealthy economic stimulus
CDB loans will go towards investment in Hebei, Jiangsu and Qinghai in a further indication of the stealthy economic stimulus on mainland
China Development Bank (CDB) has agreed to fund massive infrastructure borrowing by three mainland provincial governments in the latest sign of an effort by Beijing to prop up growth with targeted bursts of lending.
CDB, a state-owned lender that reports directly to the State Council, China's cabinet, has signed memorandums of understanding (MOUs) separately with the Hebei , Jiangsu and Qinghai governments.
The bank will offer financial support for a variety of local projects, ranging from a new airport to public housing, a CDB source, who spoke on condition of anonymity, told the South China Morning Post.
The Post reported on Monday that Agricultural Bank of China (Agbank), one of the big four state-owned lenders, signed an agreement with the Shanghai government last week to provide loan credit worth 250 billion yuan (HK$314 billion). That is equivalent to about 12.5 per cent of Shanghai's GDP for last year.
Agbank confirmed it would support Shanghai to build China's second Disneyland and pay for improvements needed to implement the city's much-heralded free trade zone.
The CDB source said the bank would lend Jiangsu money for improvements to its urban infrastructure and upgrade the regional transport network.
Remote and underdeveloped Qinghai in the northwest would get cash for road, railway and waterway construction projects.
Hebei planned to use its funding to tackle the redevelopment of slum areas and construction for its new airport zone, said the source. The MOU between CDB and Hebei was signed on August 9, but the source declined to give any specific information, such as the possible size of the loan.
The softest patch of economic growth in more than a year is putting a real question mark over the government's ability to hit its annual growth target of 7.5 per cent.
Even if it does, it would be the slowest rate of annual growth in 23 years.
Top government officials, including Premier Li Keqiang , have said they want to get the economy on a stable path of growth. But all have steered clear of calling for an outright stimulus plan that would mirror moves unveiled at the height of the global financial crisis in 2008.
The government, then led by president Hu Jintao and premier Wen Jiabao , rolled out a 4 trillion yuan economic stimulus plan that set off an inflation and housing price boom that Beijing has struggled to remedy ever since.
Senior officials have told the Post that the new lending programmes do not mean Beijing will launch a nationwide economic stimulus package.
They say so-called "unofficial economic stimulus" will be targeted to help key cities and provinces during the downturn.