Hu Huaibang, the chairman of the China Development Bank. Picture: Supplied Hu Huaibang, the chairman of the China Development Bank. Picture: Supplied
#Focac: Johannesburg - Independent Media, the owner and publisher of Business Report, today showcases an interview with Hu Huaibang, the chairman of the China Development Bank (CDB), ahead of the Forum on China Africa Co-operation (Focac), which takes place from tomorrow through Saturday in Johannesburg.
The summit will be co-chaired by President Jacob Zuma and his Chinese counterpart, President Xi Jinping, who arrived in the country yesterday – his second visit to South Africa since becoming president.
In 2014, the CDB broadened its collaboration with foreign governments, enterprises and financial institutions in key areas of infrastructure, equipment manufacturing, finance, agriculture, social sectors and energy to achieve mutual benefit and win-win outcomes.
It has geared itself to play a pivotal role in boosting Africa’s development and strengthening China-Africa trade and investment ties.
The conversation with the CDB chairman went as follows:
INDEPENDENT: Welcome to South Africa. Please introduce to our readers the China Development Bank (CDB), and also share with us briefly what it does?
Hu Huaibang: The CDB was founded in 1994 as a policy-based financial institution under the direct leadership of the State Council of China. In December, 2008, the bank was transformed into China Development Bank Corporation. In March, the State of Council of China explicitly defined the CDB as a development financial institution.
Since its founding, the bank, with the mission of “Strengthen the National Strength and Improve People’s Livelihood”, has been serving the long- and medium-term key national and economic development strategies of China and making long- and medium-term credits and investments.
The four wholly-funded or holding subsidiaries of this bank, namely, China Development Bank Capital, China Development Bank Securities, China Development Bank Leasing and China-Africa Development Fund, constitute a comprehensive financial service system of “investment, loaning, bond issuance, leasing and securities”.
By the first half of this year, the assets scale of the CDB has amounted to $1.6 trillion (about R23.1trln) and its non-performance loan ratio has been lower than 1 percent for 41 consecutive quarters, which represents a top-notch market performance.
The professional rating organisations, such as Moody’s and Standard & Poor’s, gave the CDB the same rating as China’s sovereign fund for years. The CDB is ranked 87 among the 2015 Fortune 500 and has been recognised as one of the 50 safest banks around the globe by Global Finance magazine of the US for the last five years.
INDEPENDENT: As the largest development financing institution in the world, what role does the CDB play in supporting China-Africa economic and trade co-operation?
Hu Huaibang: The CDB has been adhering to the principles of “Mutual Advantage Complementation, Reciprocity for Win-Win and Joint Development” for years. Its active expansion of international co-operation business, guidance and support of Chinese-funded enterprises to “go global”, and facilitation of bilateral and multilateral economic and trade co-operation, not only yield its business coverage of 115 countries and regions, but also gives impetus to the economic and social development of China and its residing countries. By the first half of 2015, the international business loan balance of the CDB has amounted to $311.9 billion, representing 19 percent of its total assets.
Africa is one of the key areas of the CDB’s international business. By the first half of 2015, the CDB has provided more than $34bn of investment and financing in total for 43 African projects.
Among the funds, the long- and medium-termed loans amounted to $32bn to serve sectors such as: agriculture; electricity; manufacturing; resource development; communication; roads; aviation; port; urban public utilities and people’s livelihood. The funds have also been channelled towards equipment “going global” projects, such as purchases of Chinese locomotives from China Railway Rolling Stock Corporation by South African state-owned transport company Transnet, exports of ZTE and Huawei telecoms devices and Shenzhen Energy’s gas power station in Ghana.
As for the Special Loan for small and medium-sized enterprises (SMEs) in Africa, we have issued almost $1.3bn in total to create 75 000 local jobs directly and benefit 460 000 peasant (lower income) households indirectly; and we also have promised almost $3.2bn of investment via the China-Africa Development Fund, which has triggered more than $16bn of investment by Chinese enterprises in Africa.
While supporting the growth of Chinese enterprises in Africa, the CDB also helps to enhance the local economic and social development of Africa, and makes its own active contribution to the improvement of China-Africa pragmatic co-operation.
INDEPENDENT: The China-Africa Development Fund (CADFund) is one of the key co-operation measures in the framework of Focac. What do you see as the role of the China-Africa Development Fund in fostering China-Africa co-operation?
Hu Huaibang: The CADFund is one of the eight pragmatic measures for co-operation with Africa announced by the Chinese government at the Beijing summit of Focac in 2006. Aimed at encouraging and supporting investment in Africa by Chinese enterprises, the CADFund – with a total capital scale of $5bn – began its operation as one of the CDB’s subsidiaries in June, 2007.
This first equity fund of China dedicated to Chinese investments in Africa is an unprecedented measure for China-Africa co-operation. By providing capital support, it not only solves the problem of start-up capital for projects in Africa, but also shares risks with the partners to ensure continuous operation of the projects, which – along with the loaning business – constitutes the “two-wheel drive” advantage for the CDB.
During its more than eight years of operation, the CADFund played an important role in guiding and supporting Chinese enterprises to invest in Africa. While accelerating the Chinese investments in and co-operation with Africa and deepening the new-type China-Africa strategic partnership, this fund has become the principal platform for Chinese enterprises to invest in Africa.
Up to now, the CADFund has determined to invest in 83 projects in 35 African countries in multiple sectors, such as equipment and production capacity, infrastructure, energy, mineral, industrial park, agriculture and people’s livelihood. This gave impetus to China-Africa co-operation in areas such as “Three Networks and Industrialisation” (high-speed railway, high-speed road and aviation networks and infrastructure industrialisation), production capacity and equipment manufacturing.
While providing financing support, the CADFund also actively brought its experience and talent advantages accumulated in the eight-plus years into full play, to provide Chinese enterprises with planning, consulting and other intelligence services for their investments in Africa and to prepare the blueprint for the development of Africa.
The investments of the CADFund match well with the African countries’ own development demands.
All the investment projects aimed at strengthening the economic “blood-making” (lifeblood) functions of the African countries not only facilitate the economic integration of Africa and accelerate its industrialisation, but also effectively improve the local livelihoods.
Incomplete statistics show that the investment projects determined by the CADFund, if all implemented, could provide 11 000 heavy- and medium-duty trucks, 400 000 TV sets, 600 000 refrigerators, 300 000 sets of air-conditioners, 1.6 million tons of cement and other multiple products for the African market every year, which could increase the local exports by about $2bn and local taxes by about $1bn and benefit more than 1 million African people directly. Its conscientious practice of the reciprocal and win-win missions of the new-type China-Africa strategic partnership has been appreciated by the leaders of China and Africa and all walks of life of the two sides repeatedly.
While boosting China-Africa economic and trade cooperation with its investments, the CADFund has been actively practicing the new-type concepts of morality and interest for China-Africa co-operation and unswervingly adhering to the principles of “being responsible, being righteous and being compliant” to guide the Chinese enterprises to perform their social responsibilities. Its special Ebola-fighting donations on behalf of the CDB, partnership with China International Poverty Reduction Centre for poverty reduction in Africa, strengthening of people-to-people exchanges with African countries and organisation of African students and youth in China to launch the “Join Hands, Everybody from China and Africa” theme event, all gave strong impetus to the long-term development of China-Africa ties.
INDEPENDENT: Since the Special Loan for SMEs in Africa also resulted from Focac and is undertaken by the CDB, what role has it been playing in boosting the development of African SMEs?
Hu Huaibang: The Special Loan for SMEs in Africa was one of the new eight measures announced by the Chinese government at the fourth ministerial meeting of Focac in 2009. It is aimed at strengthening Africa’s own “blood-making” capabilities, improving the local livelihoods and further enriching the contents of China-Africa pragmatic co-operation.
Its initial planned scale was $1bn, but its business scale has been on the rise continuously through its development in the past six years.
By the first half of 2015, the special loans have covered 32 African countries with a total of committed amounts of $2bn, among which $1.6bn-worth of contracts have been signed and $1.3bn has been issued in total. By supporting the industries in close relation to people’s livelihoods, such as agriculture, animal husbandry, light industry, machinery and small commodity trade in Africa, these projects have created 74 900 local jobs directly and benefited 458 000 peasant (lower income) households on the continent.
INDEPENDENT: This Johannesburg summit of Focac has commanded the attention of the world. What new measures will the CDB, as a key financial force of China-Africa co-operation adopt to enhance the economic and trade co-operation between China and Africa?
Hu Huaibang: Africa is the continent with the largest number of developing countries across the world, while China is the largest developing country across the world. China and Africa have all along been a destiny community in weal and woe (in good and bad times) and an interest community for win-win co-operation.
Given the current international economic scenario of profound adjustment and interacting uncertainties, the China-Africa co-operation features mutual needs, complementary advantages and opportunities. The two parties should further seek interest convergences and deepen the relationship of destiny community. The success of this Johannesburg summit of Focac will inject fresh impetus to, and further invigorate, the reciprocal and win-win economic and trade co-operation between China and Africa.
For the next step, the CDB will actively implement the achievements of the Johannesburg summit and President Xi Jinping’s visit to Africa brings the role of long- and medium-term loans and the intelligence advantages, such as planning and consulting for Africa, into full play. The CDB will also make proper use of the platforms including the CADFund and the Special Loan for SMEs in Africa to expand the co-operation with the African governments and the multilateral and bilateral organisations such as the AU and African Development Bank.
Based on the “Three Network and Industrialisation” of Africa and the China-Africa production capacity co-operation, we will boost the China-Africa economic and trade cooperation to higher levels and larger scopes and enhance the economic development and livelihood improvement of China and Africa.
BUSINESS REPORT