A top official with China's central bank yesterday said China
and Africa should work closely to use development funds to improve
less-developed areas.
"China and Africa should strengthen communication in exploring a
better development finance system to support less-developed areas,"
said Xiang Junbo, vice-governor of the People's Bank of China.
"Development finance system is a broad concept, which covers not
only traditional policy-based finance, but also other financial
support modes that combine policy and commercial ingredients,"
Xiang said during a seminar held in Shanghai in advance of the 2007 annual meetings of the African Development
Bank Group.
China has been building a development finance system to support
impoverished areas over the past 20 years, according to Xiang.
The Chinese government has established policy banks that provide
subsidized loans to those areas and extend preferential policies to
increase investments.
The China Development Bank (CDB), established in 1994, plays a
catalyst role in promoting commercial fund flow into less-developed
areas.
By December 2006, CDB had total assets of over 2.3 trillion yuan
(US$300 billion), with outstanding loans of 2 trillion yuan (US$260
billion) and a non-performing loan ratio of 0.72 percent.
Xiang said that market-based measures have been used to enhance
commercial financial institutions' interest in supporting the
underdeveloped areas.
Interest rate is used as a means in China to guide financial
institutions to support less-developed areas, he said.
"In market-based interest rate reform, the first step we took
was to lift the lending interest rate ceiling of rural financial
institutions in providing financial services in less-developed
areas," Xiang said.
In a pilot program initiated by the central bank, micro-credit
companies were set up in 2005 in less-developed provinces in the
country's western regions. As a result, the decline of financial
services in those regions reversed course.
"However, development finance is not limited to policy-based
financial activities but includes commercial, cooperative and
charitable financial activities," the vice-governor said.
With the globalization of the world economy, the biggest
challenge and problem for both China and Africa is to help
less-developed areas out of poverty as well as achieving balanced
economic and social development, he said.
Xiang said that although China has experimented with using
development finance to support less-developed areas, it still lacks
experience in this field.
"Africa has gained a lot of valuable experience and has had many
successful practices in development finance, particularly in such
areas as the management of development finance projects,
development of social funds and growth of micro credit. We hope to
take this opportunity to learn about Africa's experience and
practices in development finance," he said.
Regional imbalances are one of the major bottlenecks for China's
economic development.
Over the past 20 years, China has taken great efforts and
employed a variety of policy measures, including raising household
income, improving the development environment, optimizing economic
structure and improving human capital, to promote the development
of the undeveloped areas.
The poverty-stricken population in rural China has dropped to 24
million in 2005 from 250 million in 1978.
Meanwhile, a national strategy for developing the west has been
implemented to help poor areas.
(China Daily May 14, 2007)
