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CDB to Leverage Counter-cyclical Adjustments and Enhance Support for the Real Economy

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Time:2019-01-22  Source:CDB

On January 22, CDB convened its 2019 Annual Working Conference in Beijing to review its work in 2018, analyze the current situation, and organize its work in 2019 under the guidance of Xi Jinping's Thought on Socialism with Chinese Characteristics for a New Era. Zhao Huan, Chairman of CDB, delivered a speech at the conference, noting that in 2019 CDB should continue to uphold the CPC's overall leadership over development finance with a focus on its mission and positioning, while following financial development trends, building capabilities in areas of weakness, enhancing risk control and compliance of internal control, promoting reform and innovation, giving full play to counter-cyclical adjustments, and making more efforts to boost the real economy through financial services, so that CDB will make more contribution to China's social stability and sustainable and healthy development of the Chinese economy.

The conference was moderated by Zhou Qingyu, Executive Vice President of CDB, and was attended by Zheng Zhijie, President of CDB, who reported on CDB's operation and management in 2018, Song Xianping, Head of Discipline Inspection and Supervision of CDB, and Executive Vice Presidents of CDB Zhang Xuguang, Cai Dong, Ma Xin, and Liu Jin.

Zhao Huan summarized CDB's work in 2018, which he described as the opening year of implementing the instructions of the 19th CPC National Congress. He noted that under the firm leadership of the CPC Central Committee with Xi Jinping at its core, CDB addressed the challenges brought about by significant external changes and economic downturn, adhered to the New Development Principle, and promoted the supply-side structural reform, high-quality economic development, and the integration of the CPC discipline into the governance of CDB, making new progress in all aspects of its work. As of the end of 2018, CDB reported total assets of 16.2 trillion RMB, including 15.98 trillion RMB in banking. Its non-performing loan ratio has been controlled below 1% for 14 consecutive years.

According to Zhao Huan, 2019 marks the 25th anniversary of CDB's founding. CDB has been devoted to enhancing national competitiveness and improving people's livelihood over the past 25 years and has created a financial development path with Chinese characteristics, making outstanding contribution to China's economic and social development. To address the needs of development in a new era, CDB should: 1) grow stronger by pursuing the goal of developing into a world-leading development finance institution; 2) bear in mind its mission and original aspirations and hold fast to its positioning and business scope as a development finance institution; 3) follow financial development trends, adhere to market-based operation, and accelerate innovation of financing models; 4) address weaknesses, deepen the internal institutional reform, and build professional capabilities in risk control and high-quality development; and 5) enhance CPC's leadership and Party building to provide strong political support for CDB’s high-quality development.

Zhao Huan also set out a range of requirements for CDB's work in 2019. First, CDB should continue to uphold the basic principle of seeking progress while maintaining stability and leverage development finance to make counter-cyclical adjustments. Second, with a focus on promoting the supply-side structural reform, CDB should make vigorous efforts in areas of priority and weakness, enhance support for the high-quality development and technological innovation of the manufacturing industry and for bridging infrastructure gaps, promote poverty alleviation, rural revitalization, regional coordinated development, and people's livelihood, and facilitate the development of private enterprises and micro, small and medium-sized enterprises. Third, CDB should promote international collaboration and use a combination of financing and talent pooling to support joint construction of the Belt and Road. Fourth, CDB should put more effort in innovation-based development and move to new financing models. Fifth, CDB should hold its bottom line and prevent and address risks by continuously reforming its risk management system, enhancing risk control in priority areas, and improving internal management compliance. Sixth, CDB should improve corporate governance, deepen internal reforms, enhance operation and management, optimize incentive and constraint mechanisms, and elevate its capabilities in providing comprehensive financial services.

Zhao Huan stressed that CDB should follow the overall requirements of Party building in a new era, undertake more political responsibilities, stand steadfast with CPC's political commitment, improve political capabilities, carry out Party building at all levels, so as to provide strong political support for its reform and development. More specifically, CDB should: 1) give the highest priority to political development and uphold the CPC's overall leadership over development finance; 2) persist in studying and carrying out Xi Jinping's Thought on Socialism with Chinese Characteristics for a New Era; 3) comply with the regulations on the work of CPC branches and promote all-round progress of its grassroots CPC cells; 4) study and carry out the instructions of the Third Plenary Session of the Central Commission for Discipline Inspection and enhance efforts to fight against corruption; and 5) follow the CPC guidelines for a new era and build a leadership team of high-quality professionals.

Zheng Zhijie stated in the operation and management report that in 2018, CDB promoted the supply-side structural reform by reducing the balance of loans for the steel, coal and coal power industries in a steady manner, enhancing support for integrated circuit, high-end manufacturing, environmental protection, and other areas of weakness, granting loans of 366.3 billion RMB for strategic emerging industries, cutting intermediary service fees by 7 billion RMB, and lowering the interest rate of loans for poverty alleviation and other projects. To enhance support for the real economy and the development of infrastructures, basic industries and pillar industries, CDB granted loans of 217.5 billion RMB for new urbanization progress, 63 billion RMB for hydraulic engineering, and 72.9 billion RMB for railway systems and created a special loan facility of 100 billion RMB to address the challenges facing private enterprises, while developing new financing models for government-led projects, bridging infrastructure gaps, and helping local governments reduce debt risks. To foster new economic drivers, CDB granted loans of 123.8 billion RMB for integrated circuit and related industries and 317.9 billion RMB for environmental protection, energy saving and emission reduction and facilitated regional coordinated development by removing Beijing's non-capital functions in a progressive manner, promising a loan facility of 32.7 billion RMB (one drawdown has been made) for the early construction of Xiong'an New Area, and granting loans of 31.2 billion RMB for protection of the Yangtze River. To reduce poverty, CDB granted 292.9 billion RMB loans for targeted poverty alleviation in 1,118 poverty-stricken counties and 28.7 billion RMB education loans, raising the total amount of its education loans to 164.7 billion RMB and the total number of beneficiaries to 26.22 million. To support affordable housing, CDB worked with local governments to fund shantytown renovation in compliance with laws and regulations and has moved 23 million households living in shanty areas into apartments as of the end of 2018. With respect to promoting joint construction of the Belt and Road, CDB reported 312.4 billion USD in outstanding loans for international operations and has remained to be the Chinese financial institution granting the largest amount of foreign currency-denominated loans. With continuous efforts made in carrying out the special lending scheme of 250 billion RMB for the Belt and Road Initiative, CDB has promised loans of 466.5 billion RMB and granted 111.7 billion RMB loans as of the end of 2018.

As required by Zheng Zhijie, CDB’s operation and management in 2019 should focus on: 1) enhancing analysis of the external environment and applying a more forward-looking and proactive approach to work; 2) deepening the supply-side structural reform by consolidating existing outcomes, energizing market participants, building higher-level industry chains, and ensuring free flow of economic factors; 3) pooling CDB's strengths to promote significant risk control, poverty alleviation and pollution control; 4) channeling funds to areas of priority and weakness; 5) optimizing current systems to support the high-quality development of CDB's international operations; and 6) enhancing integrated operation as well as coordination and collaboration between different business operations.

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