China is set to invest “hundreds of billions of yuan” into essential manufacturing and technology projects through a joint venture between the country’s industry ministry and the state-backed China Development Bank, the government announced Friday.
China’s Ministry of Industry and Information Technology (MIIT) said on Friday that it has “targeted an initial batch of 105 projects across the country, with a combined planned investment of 710 billion yuan ($103.9 billion),” according to the South China Morning Post.
Of that amount, “about 300 billion yuan ($43.9 billion) will come from bank loans,” MIIT said in a statement.
“China Development Bank [CDB] agreed to lend 125.2 billion yuan ($18.3 billion) to the development of 24 projects. The bank said it had granted a credit line worth 250 billion yuan ($36.6 billion) to those projects in late March, meaning it has already opened up the government lending tap to help finance important projects nationwide,” the newspaper noted. Neither MIIT nor CDB provided a list of the targeted projects.
CDB is the financing arm of the Chinese Communist Party (CCP). The bank’s chairman, Zhao Huan, is a CCP Committee Secretary. CDB is responsible for financing large-scale development projects in China. In 2010, it lent the Three Gorges Corp over $11 billion to develop the Three Gorges Dam, which remains the world’s largest hydro-electric dam.
CDB has assets estimated at $1.7 trillion and serves as “a key player in China’s projection of ‘soft power’ abroad, funding projects in Africa and Latin America,” Fortune reported. “China’s ruling State Council has taken steps … to tighten its control over CDB and other policy banks, and it is widely expected to redirect the focus of their financing efforts more tightly on infrastructure and away from commercially-oriented projects.”
An information circular released by MIIT in April revealed that “the investment threshold for a project to receive cheap money from China Development Bank was set at 1 billion yuan ($146.24 million),” SCMP reported. “[P]rojects eligible for such financing” are rooted in industries such as “information technology; new materials; high-end equipment; energy-saving and new-energy vehicles; medical equipment and pharmaceuticals; technological renovation of traditional manufacturing projects; and new infrastructure projects such as for 5G telecommunications and big data centers.”
According to SCMP, the new joint initiative between MIIT and CDB is part of China’s recent efforts to develop its domestic manufacturing sector “after a growing list of Chinese businesses, including [telecom giant] Huawei, have been blacklisted by Washington, restricting their access to U.S. products and technologies.”
Ding Shuang, the chief Greater China economist of Standard Chartered Bank, told SCMP that “there’s no need for China to keep a low profile or cover up its ambitions, given the obvious containment [policy] by the U.S.”