#header-inner img {margin: 0 auto !important; #header-inner {text-align: Center ;} Fiji Coupfourpointfive: Chinese banks lending more than World Bank

Wednesday, January 19, 2011

Chinese banks lending more than World Bank

Beijing, Jan 18 (DPA) China has loaned more money to developing countries than the World Bank in the past two years, according to the Financial Times.

Two state financial institutions, the China Development Bank and Export-Import Bank, loaned governments and companies in developing countries at least $110 billion in 2009 and 2010, surpassing the World Bank's outlays of $100 billion from mid-2008 to mid-2009, which was a record for the world lending institution, the newspaper said, citing its own research.

The loans were an indication of China's economic influence, its drive to secure raw materials and its efforts to diversify its economy away from a reliance on exports to Western developed countries, the Times said.

The money went to such projects as loans-for-oil agreements with Russia, Venezuela and Brazil; infrastructure projects in Ghana and Argentina; and power equipment for an Indian firm.

China offers most of its loans at more favourable terms than other lenders, including the World Bank, particularly when those projects coincide with its national interest.

To avoid competition over loans, the World Bank is trying to work with China and welcomed 'an important and growing partnership', the newspaper said.

'One of the topics I have been discussing with the Chinese authorities is how we can work with them to share our mutual experience to support other developing countries, whether in South-East Asia or Africa,' World Bank President Robert Zoellick said on a visit to China last year.

Both the China Development Bank and Export-Import Bank are so-called political banks and release no statements about the amount of their loans. The Financial Times said it compiled its figures from public announcements from the banks, borrowers and China's government. The true amount of the loans could be much higher, it said. (Sify News)

Picture: Fiji cuddling up to China.


Anonymous said...


Mohinish said...

The World Bank is an obsolete institution as Martin Wolf (a former World Bank Director) has already convincingly stated 10 years ago. The absurdity of the World Banks situation is underlined by the fact that it still loans to China where a couple of trillion in foreign exchange reserves sit waiting to be invested. Anyway, what we are going to see in the next decade is an increased competition between China and the West. This competition will include resources, political influence and ultimately military strength and standing. Small countries will have to choose which side they want to ally with. Those ruled by dictators and human rights violators (such as Fiji) will not have a choice: Going to bed with the pernicious predator China is inevitable.

Coup 4.5 said...

Further to, edited and ex BBC: The two Chinese banks do not publish a detailed breakdown of their overseas loans, so this research is based on public announcements about specific deals from them, their borrowers or the Chinese government.

That means the figure arrived at for the amount of Chinese lending is more likely an underestimate than an overestimate because some - more sensitive - loans will not have been made public.

The Chinese lenders are so-called policy banks - they have a mandate to further whatever Beijing sees as its national interest.

One of China Development Bank's specific tasks is to try to alleviate and, where possible, eliminate bottlenecks in supplies of raw materials or land for China's economy.

It also tries to open up foreign markets for Chinese companies.
The period looked at by the researchers included the worst of the global financial crisis.

Wounded miner Vincent Chenjela (file picture, Oct 2010) Some investments overseas face problems -as in a recent shooting at a Zambian mine.

Chinese banks were offering loans to producers of raw materials at a time when it was hard for them to attract financing from elsewhere.

That helped secure long-term energy deals, including oil supplies from Russia, Venezuela and Brazil.

The Chinese government, which is sitting on $2 trillion (£1.26 trillion) of foreign exchange reserves, has ample amounts of cash to fund loans which help promote its strategic objectives.
But what is interesting is that in the private sector, it is a different story.

Outward Foreign Direct Investment (FDI) by Chinese companies (not including banks) was around $50bn (£31.5bn) last year - around half the FDI that flowed from foreign companies into China.

This is the world's second-largest economy but its outward flow of FDI is just the fifth largest in the world.

That suggests that Chinese companies still do not have the confidence to make big acquisitions overseas in order to grow, or of course that they are unable to.

What does not help is the sometimes murky relationship between the government and some of the country's biggest firms which can make the targets of such acquistions or potential merger partners nervous about doing deals with the Chinese.

Corruption Fighter said...

Anyone with any knowledge of how development finance works would know that Chinese 'aid' is potentially the biggest disaster that could befall our country.

In the 1970s and 80s Japan gave 'aid' to countries all through Asia on terms that were supposed to be 'soft'. However, when the Japanese yen rose in value, the debts that the 'aid recipients' owed to Japan increased dramatically.

John Samy understood this and he hoped that his wonderful Charter could convince real aid donors to lend support.

Our debts to he EXIM Bank of India have already ballooned after our dollar was devalued, and don't even mention the fact that the debt was run up for a job that was badly botched.

No-one in the know doubts that the Chinese currency will rise in value. Chaudhry as Minister for Finance understood this and he did not want to saddle the nation with debt. And apart from the Chinese currency rising in value, our dollar is likely to be devalued again in the next year or two.

Whether Bainimarama understands this or he just doesn't care because his only goal is to fill his pockets as full as he can before he's forced to flee, I don't know.

Our only hope is to repudiate the debt to the Chinese by arguing that it was incurred by an illegal government.

Anonymous said...

China is adopting a strategy of cornering the world debt market through its expansive money lending program.They either lend cash for interest or cash for resources and strategic position.

Let us all not be fooled by China's so-called superpower image..three quarters of their military and people still use the bicycle as a means of primary transportation.

China is a paper tiger in terms of industrial might.If the leading industrial nations like the USA, Germany and Japan take off their clothing in winter,China comes down with the flu.Their economy cannot stand on it totally dependent on American consumers. If the USA shuts off trade, China will not exist.

Furthermore,China's policy of lending is a normal risk taking exercise in diplomacy and can be reneged if carried out under dubious circumstances.For example,after Voreqe and his fellow misguided IMG primates are thrown in jail,a newly elected government has the right to tear up the debt contracts taken out during their stupid coup.

Anonymous said...

Bottom line....learn to speak Mandarine,Americas days are declining,like England/Russia/France/Germany/Spain...all once world leaders..their time alas is drawing to a close.For better or for worse its now china's turn and India to make their play as world leaders.If Fiji is on this course then so be it.one only has to see how badly the US is in debt and ask yourselves..how will they repay this debt?...print more money? i think not.China /for better or for worse is going to be the worlds ruler.

Anonymous said...

God help us should India ever become a world leader - can't or won't pay their creditors for work done at the Commonwealth games.
Least with the Chinese what you see is what you get.

Radiolucas said...

@ Anon 9:27am

Hard to generalise on that - there are companies in all countries that behave unscrupulously. China included.

Anonymous said...

"Fijians" once were arriors. Those include those institutions RFMF and the Fiji POLICE full of "yes" pufters.