PRESS RELEASE
China To Infuse $62 billion To Recapitalize Three Banks To Kickstart ’One Belt, One Road’ Project
April 21, 2015 (EIRNS)—To kickstart the ambitious "One Belt, One Road" project comprising the New Silk Road Economic Belt and the 21st Century Maritime Silk Road, and including plans to build roads, ports, high-speed railroads, and other infrastructure linking China with Southwest, Central, South and Southeast Asia, People’s Bank of China announced, today, that it will recapitalize the China Development Bank (CDB), the China Exim Bank, and the Agricultural Development Bank of China (ADBC) with $62 billion. In return, People’s Bank will become the second-largest shareholder in the China Development Bank and the biggest shareholder of the China Exim Bank, RT reported today.
The London-based Financial Times, citing China’s Caixin magazine’s source in the CDB, pointed out that both CDB and Exim Bank need a source of stable foreign exchange funding to support "One Belt, One Road." China’s foreign exchange reserves stood at $3.6 trillion at the end of March, according to Ministry of Finance figures. At the same time, Caixin reported that the experts had warned that all three banks were undercapitalized. The Ministry of Finance and China Investment Corporation each own a 50% stake in CDB, but the bank has not received a capital injection since 2008. The Financial times also noted that China’s boost to its export credit agency stands in stark contrast to the U.S., where the U.S. Export-Import Bank is fighting for survival amid a push by some Republicans to shut it down once funding runs out in June.
The China Development Bank has provided funding for many of the country’s most ambitious financial diplomacy initiatives, including loans-for-oil to Russia, Brazil, and Venezuela. Both CDB and China Exim Bank also provide trade credit to support Chinese exports.
