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Exim Bank will assist with
reforms
BEIJING - The
Export-Import Bank of China (China Exim Bank) said
August 10 that it would help domestic companies to
hedge market risks brought about by recent reforms
in China's foreign exchange rate regime.
Bank president Li Ruogu said that all
firms, especially those engaged in the foreign
trade business, are facing new risks following
China's recent adjustments to its forex policy. On
July 21, the government scrapped the yuan's peg to
the US dollar and reformed the exchange rate
regime. It moved to a managed "floating" exchange
rate regime based on market supply and demand with
reference to several currencies. The country also
strengthened the exchange rate of the yuan to 8.11
to the US dollar, from 8.28. The changes were
likely to cause many companies to suffer losses
because they borrowed yuan but earned US dollars,
Li said. "Domestic companies need to learn how to
deal with a more flexible exchange rate
mechanism," he said.
China Exim Bank, a
strong supporter of China's foreign trade
companies and firms which invest in foreign
countries, will work with domestic enterprises to
design mechanisms to counter risks, said Li. The
bank will also help them to train people who are
good at figures and develop suitable financial
products. "We must design financial products for
the sake of domestic companies and China's
economic development," added Li.
This
means China Exim Bank will have to diversify.
Officials from government departments, including
the People's Bank of China, the China Banking
Regulatory Commission and the Ministry of Finance,
have already reached common ground in this regard,
Li said. They believe the bank should not only
engage in policy-related business but also
practice market-oriented functions. They further
believe the government should inject more money
into the bank.
The China Exim Bank was
established in 1994, with the aim of supporting
the export of the country's machinery and
electronic products. The bank has issued 400
billion yuan (US$49.3 billion) in loans since
then, with 85% of them used to fund said exports.
During the first half of this year, the bank
approved loans totaling 95.5 billion yuan (US$11.8
billion), an increase of 136% from the same period
last year. By the end of June, the bank's
outstanding loans stood at 162.8 billion yuan.
As China's economy develops, the bank will
also give key support to imports, Li said. "If we
do not do that, the China Exim Bank will become
the China Export Bank," he said. The bank will
help import foreign resources, technologies and
key equipment demanded by China's economic
development, Li added. It will also explore ways
to support the country's agricultural development,
he said.
The Chinese economy has grown at
an average annual rate of more than 9% over the
past decade, which has aroused much attention from
the rest of the world. At the same time, domestic
companies have become more and more interested in
international cooperation and competition. This
situation provides enormous business opportunities
for the China Exim Bank, which also helps domestic
companies which invest overseas, Li said. "We have
to reform to seize these opportunities," he urged.
The bank must set up an internal control
system to hedge risks and reform its branches and
internal structures, Li said, without giving
further details. The president paid great
attention to staff members, saying, "we rely on
talent to develop our business." The human
resource department needs to take measures to make
sure talented people are willing to work for the
China Exim Bank, he said.
(Asia
Pulse/XIC) |
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