Financial connectivity supports infrastructure projects worldwide

China Development Bank, a State-funded and State-owned development finance institution dedicated to supporting national economic development in key industries and underdeveloped sectors, has paved the way for the high-quality cooperation under the framework of the Belt and Road Initiative over the past decade.

Since 2013, the BRI has achieved substantial results in becoming a key platform for international cooperation. CDB, with financial connectivity as a focus, has played a crucial role in serving the stable and long-term development of the BRI through efforts such as funding infrastructure construction, helping establish rules and standards and improving people's well-being. As of the end of September, CDB has supported more than 1,300 Belt and Road projects, with a total investment of over $280 billion.

Advancing major initiatives

During the opening ceremony of the first Belt and Road Forum for International Cooperation in 2017, China announced CDB's special lending scheme involving 250 billion yuan ($34.25 billion) to support infrastructure construction, improve production capacity and boost financial cooperation under the BRI. In the second Belt and Road Forum for International Cooperation in 2019, China pledged to extend its role in providing special loans for projects under the BRI.

CDB has set up a special lending scheme for the BRI to pool resources to increase financing support for BRI cooperation. By fully implementing the Responsible Financing in Common Principles and the Belt and Road Green Investment Principles, the financial group has incorporated green standards, environmental and climate risks into its overseas investment and financing assessment and decision-making processes, strengthened project cash flow and risk management, and provided higher-quality financial services under the BRI.

As of the end of September, the cumulative contract signings for the BRI special loans had reached 533.3 billion yuan, with the amount of disbursed loans achieving 491.5 billion yuan. With the support of special loans, a number of projects in infrastructure, financial cooperation, people's livelihoods and environmental protection have made significant progress while promoting local economic and social development and achieving win-win results for China and other participants in the initiative.

Over the past decade, CDB has consistently upheld a global perspective, followed the spirit of major diplomatic events such as the China-Central Asia Summit and Forum on China-Africa Cooperation, and established a variety of high-quality complementary financing initiatives. For example, CDB established a 10 billion yuan special loan for China-Central Asia cooperation to enhance project cooperation between China and five Central Asian countries in areas such as trade, investment, transportation, agriculture, energy resources and infrastructure.

It has also established a $5 billion special fund dedicated to advancing the implementation of global development initiatives. During the first High-Level Conference of the Forum on Global Action for Shared Development held in July in Beijing, CDB signed a memorandum of cooperation with the China International Development Cooperation Agency, focusing on such areas as poverty reduction, climate change and green development, and providing financial support for projects related to global development.

Leveraging synergy with its subsidiary, the China-Africa Development Fund, CDB helps Chinese companies invest in Africa in a market-oriented manner, actively serving the implementation of initiatives such as the Ten Cooperation Plans, Eight Major Actions and Nine Major Projects under the Forum on China-Africa Cooperation. As of the end of September, the China-Africa Development Fund has invested more than $6.8 billion in 39 African countries, mobilizing about $31 billion in Chinese investments and financing on the continent.

International cooperation

CDB adheres to the principles of dialogue, joint contribution and shared benefits while focusing on financial cooperation and diversified synergy that promotes establishment of multilateral financial cooperation mechanisms. To that end, it has revved up efforts to strengthen multilateral cooperation with financial institutions from Belt and Road countries as well as international financial institutions.

Over the years, CDB has established eight regional financial cooperation mechanisms, including the Shanghai Cooperation Organization Interbank Association, China-ASEAN Interbank Association and BRICS Interbank Cooperation Mechanism. Within these multilateral frameworks, it has facilitated activities such as syndicated loans, joint financing and interbank credit to promote inclusive growth under the BRI.

As an example, the China-ASEAN Interbank Association, established in October 2010 during the 13th China-ASEAN Summit, covers Bank Islam Brunei Darussalam, Canadia Bank, Bank Mandiri, Lao Development Bank, Commerce International Merchant Bank, Myanmar Foreign Trade Bank, BDO Unibank, Kasikorn Bank, DBS Bank of Singapore, Bank for Investment and Development of Vietnam and CDB.

Building on this foundation, in November 2019, during the 22nd ASEAN Plus Three Summit, the member banks of the China-ASEAN Interbank Association, together with Japan Bank for International Cooperation and Korea Development Bank, established the ASEAN plus Three Interbank Cooperation Mechanism. Under the mechanisms, as of the end of June, CDB has engaged in credit cooperation worth 20.6 billion yuan with relevant member banks and collaborated with them to disburse loans totaling $9 billion. This has provided effective financial support for regional economic and trade cooperation and small and medium-sized enterprises.

As important platforms for regional financial cooperation, the two banking unions have achieved effective cooperation in mechanism, policy and project financing, and with CDB playing an integral role, economic and social development in the region has been greatly improved, said an official from the Mission of China to ASEAN.

While continuously achieving new results in promoting multilateral cooperation, CDB actively bolsters practical cooperation with international financial institutions through various means such as joint financing and third-party market cooperation.

In November 2022, CDB and Senegal's Ministry of Economy, Planning, and Cooperation signed a loan agreement and jointly supported a wastewater treatment project in Dakar's Hann Bay with the French Development Agency. This marked the first third-party market cooperation conducted through joint financing by CDB and the French Development Agency.

Enhancing well-being

As a development finance institution, CDB operates in a market-oriented manner, acting as a bridge between the government and the market and actively supporting the construction of key projects under the BRI. As such, empowering infrastructure connectivity to consolidate the foundation of economic and social development is a top priority.

The China-Europe Railway Express, known as the "steel camel caravan" connecting Asia and Europe, has become an important choice for land transportation logistics among countries and regions involved in the BRI, and CDB has assisted in enhancing the railway's infrastructure capabilities. This includes upgrading and expanding bottleneck sections along the domestic routes, constructing key port stations and promoting the continuous improvement of the domestic route network. CDB also offers financial products such as special loans for foreign trade and international logistics to help the operators of China-Europe Railway Express routes, contributing to a steady increase in freight transport capacity.

Promoting green finance and practicing responsible financing are other CDB priorities. For instance, in Chile, as one of the outcomes of the second Belt and Road Forum for International Cooperation, CDB provided credit to Banco Security, which was used to finance nine solar power projects, adding a total installed capacity of 46.9 megawatts.

In Pakistan, CDB participated in financing the Karot hydropower station, which celebrated its one-year anniversary of safe operation in June. It has generated a cumulative total of 3.64 billion kilowatt-hours of electricity, equivalent to saving about 1.59 million tons of standard coal and reducing carbon dioxide emissions by 3.98 million metric tons. In Thailand, CDB provided financing support for Bangkok's first waste-to-energy project with a daily incineration capacity of 500 tons of household waste.

To enhance the public well-being of the Belt and Road countries, CDB has funded a number of "small yet smart" projects.

In Africa, CDB provided $300 million in credit to the National Bank of Egypt and fully disbursed it. This has benefited 49 key projects in various areas including the development of small and medium-sized enterprises and infrastructure construction. Of the total, $200 million was allocated to "small yet smart" projects that benefit people's livelihoods in fields such as food processing, healthcare, education and services.

Over the past decade, CDB has helped launch a number of key projects such as the Jakarta-Bandung High-Speed Railway in Indonesia, Argentina's Belgrano Freight Railway Phase I restoration, Laos' Vientiane to Vang Vieng Expressway and Kazakhstan's Shymkent Refinery upgrade and transformation.

In addition, progress has been accelerated in projects related to small and medium-sized enterprises, healthcare, agriculture and education, further enhancing the independent development capabilities of partner countries while providing strong support for deepening mutually beneficial cooperation between China and other countries.

CDB has utilized various means such as think tanks, planning and exchange research seminars to promote the establishment of "soft connectivity" for rules and standards in the Belt and Road cooperation, facilitate cultural exchanges and boost mutual learning between China and other participating countries. The company said it will continue to grasp the opportunities of high-quality Belt and Road cooperation, coordinate development and security, cultivate new momentum for financial connectivity and provide first-class financial services to support the high-quality Belt and Road cooperation.