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ADB Set to Fund Western Growth
The Asia Development Bank (ADB) is to pour more investment into the construction of infrastructure facilities in the central and western regions over the next five years.
The move is believed to be able to help promote economic growth and reduce poverty in the less developed, poor rural areas, cementing the Central government's stand on narrowing the economic gap between coastal areas and the inland areas.
"The bank has initiated a shift of its investment focus from 1996, before which most of ADB's invested projects in China were located in the coastal areas," said Bruce Murray, resident representative of the bank's resident mission in China.
"ADB's investments in these areas will play an important role in helping these areas to promote economic growth as it is transparent that these inner provinces have no easy access to commercial lending," Murray said.
The bank plans to invest US$1.37 billion to finance the construction of expressway projects in Yunnan, Shanxi, Shannxi and Sichuan provinces and the Guangxi Zhuang Autonomous Region in the next three years, he said.
In Southwest China, the bank is to invest US$320 million next year to finance an expressway project to link Zhongqing and Guiyang, two major cities in the area.
The project, which is expected to be completed by 2005, would contribute to reducing poverty and improving social development by providing better access to social services and to income opportunities, Murray said.
"ADB places priority on strategically locating such investments in the interior provinces in a move to give poor villages access to improved transport infrastructure," said the banker, adding that the project would also create an environment to allow the poor to participate in the rapidly growing economy and improve their standard of living.
The bank would invest about US$1 billion to US$1.2 billion into China market each year for the next three years, Murray said, and 75 per cent of those investments would be devoted to development projects in the central and western part of the country.
"Of course, these projects should be economically and technological sound and have the potential of good returns," Murray added. "China is one of the countries where ADB's investment has reliable and promising returns."
The bank so far has an aggregate amount of US$10 billion of investment in China since the mid-1980s. Murray said ADB would continue its efforts to provide an average annual investment of US$1 billion in China, 20 per cent of its total investment of US$5 billion in all of Asia.
"And the trend is set to be steady in the coming years," he said, adding that ADB could also help mobilize more funds into the country if needed.
However, Murray warned that the bank's investment in China's financial sectors is likely to decline as the interests of its fund are higher than before due to the consecutive measures taken by the State to cut off its interest rates in the past several years.
But ADB is still seeking ways to invest in smaller domestic commercial banks, said, and the bank is now negotiating with two smaller commercial banks for an possible equity investment.
"We will not invest in China's big four commercial banks as we realize that China's big four commercial banks are so huge that our investment in them would be trivial," Murray said.
ADB now has an equity stake in the Xiamen International Bank and the China Everbright Bank, two smaller commercial banks in China.
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