$20b finance package approval in SED
A $20b finance package that the Export-Import Bank of China agreed to contribute $8b and the US Export-Import Bank $12b was approved by China and United States last Friday.
As Henry Paulson, US Treasury Secretary said at the end of the two-day Strategic Economic Dialogue (SED), “The new sources of financing are expected to send an important signal to emerging markets that both nations are committed to sustaining trade flows”, the additional $20 billion is to stimulate trade in emerging markets.
The agreement was carried on the agenda because of the falling global demand and the lack of trade credit and finally came after the World Bank forecast world trade will decline next year for the first time since 1982.
During the G20 meeting last month, the countries agreed to provide more open access to each other’s markets, as part of their efforts to deepen bilateral economic ties.
China and US are both two countries depend on global trade. So they tried their best to promote global growth and stability.
China has agreed to allow foreign incorporated banks to trade bonds in its inter-bank market, and said it will also allow foreign banks operating on the mainland to borrow capital from their affiliates overseas on a temporary basis to boost liquidity and confidence in the lenders. The loans will not count toward foreign banks’ short-term debt quotas.
Meanwhile, the US agreed to speed up approvals for Chinese financial institutions investing there, which may help inject fresh capital into its financial market.
New York has already had China’s fifth largest bank, China Merchants Bank’s branch in October, while China Construction Bank Corp, the nation’s second largest, has been waiting for the approval since last year.
Foreign investment in the financial sector and “commercially oriented” investments made through China’s foreign exchange reserves and sovereign wealth fund is welcomed in the US.
Last year, China Investment Corp (CIC), the nation’s only sovereign wealth fund enlarged its investment. But because of the financial turmoil, the fund has lost $6 billion.
CIC Chairman Lou Jiwei said last Tuesday that he did not dare invest in financial institutions due to unclear government policies on them.
And a stable economic environment is called for by Zhu Guangyao, assistant minister of finance.
Although it was not listed as a topic for the SED, the currency issue aroused concern prior to the dialogue given the recent decline in the value of the yuan against the dollar.
It is recognized that currency will encourage China to accelerate the appreciation and flexibility of the yuan.
Are you interested in the business opportunities in China?
China is one of the world’s great growth markets and is likely to be for many years to come. Foreign companies often face difficulties in assessing Chinese market demand and enacting effective strategies because of the language barriers, culture differences, and high expense.
BPOVIA is the leading virtual assistant and Knowledge process outsourcing (KPO) service provider in China. BPOVIA is the only virtual assistant company ever been nominated for the prestigious “Red Herring 100 Asia” Awards 2008. Combines international perspective with local know-how, BPOVIA can provide our clients China business development service and help our clients doing successful business in China.
Please visit http://www.BPOVIA.com/ for details about our service.
Popularity: 3% [?]