Bank Boosts 2008 Bid with New LoanChina Development Bank plans to double the amount of money it has so far loaned to the Beijing municipal government by injecting 60 billion yuan (US$7.2 billion) into the city's coffers over the next five years.It is a move both sides claim will pave the city's way towards victory in bidding for the 2008 Olympic Games. Bank Governor Chen Yuan claimed that the increased loans will also help boost Beijing's economy and social development . The new money is expected to lend strength to the Beijing municipal government as it enters the final stretch of the 2008 Olympics bid race. Most of the money will be used to support infrastructure constructions and technology reforms in the Chinese capital's major industrial enterprises, bank sources said. Part of the funds will also be applied to support the energy resource restructuring. The city has said it plans to increase use of natural gas and clean energy resources to clear up its skies. According to the lending agreement clinched recently, the Beijing municipal government will acquire 50 billion yuan (US$6 billion)in loans over the next five years from China Development Bank for use in the building of infrastructure and environmental protection projects. Another 10 billion yuan (US$1.2 billion) will be provided by the bank within three years to support high-tech enterprises in Zhongguancun, the nation's most famous cradle for start-up tech companies. While driving on Beijing's modernization process, the infrastructure projects are expected to greatly improve transportation and environmental conditions in the Chinese capital. In an attempt to maintain, and even increase, the pace of high-tech development in the city, Beijing will use the rest of the money to help promising but struggling IT and Internet companies. Lending for all the companies will be based on profit potential and credit records, so far as they can be determined, in order to minimize risks, bank officials said. This new strategy marks a departure from the past, when most of the loans by China Development Bank were motivated by policy. Officials of the Beijing municipal government have promised to aid the bank in mitigating the risks of loans to new companies. A development fund specially set up by the government for the Zhongguancun High-tech Park will be used as a guarantee for the loans. "It is a sort of long-term co-operation so we should keep regular contact and conduct thorough investigations and consulting to ensure the proper use of the funds," Chen explained. Since its establishment in 1994, China Development Bank has granted 20.5 billion yuan (US$2.5 billion) in loans to the Beijing municipal government. The money has been vital to road construction efforts and reconstruction projects involving power stations and residential areas. Source: China Daily |
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