Central Huijin to inject yuan into China Eximbank and Sinosure

Source:Global Times Published: 2009-9-16 14:55:25

State-owned Central Huijin Investment Ltd will inject capital into the Import and Export Bank of China (China Eximbank) and China Export & Credit Insurance Corporation (Sinosure), confirmed several sources close to the Central Bank and Ministry of Finance.

But many details, such as the injection amount, management structure and accountability mechanisms were still to be undecided.

Debates about who would inject into the two firms lasted a long time, and the Central Bank, Ministry of Finance, and Central Huijin were all on the possible list.

Huijin was chosen mainly for its business positioning. Since the company has mainly invested in some commercial financial organizations before, its investment in the two policy financial institutions this time will help Huijin to become spokesman of State-owned financial capital.

"This means Huijin walks one step closer to the State-owned Assets Supervision and Administration Commission of the State Council (SASAC)," analysts pointed out.

The Central Bank organized a panel to start the reform of China Eximbank and Sinosure in March this year, since the two institutions are undertaking the responsibility carrying out the strategy of Chinese enterprises "going out".

According to the latest figures released by the General Customs Administration, China's import and export sector is set to grow negatively, so the country needs to stabilize overseas market demand through expanding domestic demand to achieve the balance.

Meanwhile, as the financial crisis continues, the commercial banks have held back on loans, making financing from governmental and semi-official export credit agencies especially important.

As a result, the two institutions' business expanded dramatically and need to expand further. In the first half of this year, the loans issued by China Eximbank expanded 129.9 percent year-on-year, far exceeding the total amount it loaned out last year.

Until July 2009, the amount underwritten by Sinosure's short-term export credit insurance amounted to $2.15 billion, up 250 percent year-on-year. While the State Council asked it to achieve 84 billion yuan in short-term export credit insurance, it was far more than last year's 36.5 billion yuan.

Moreover, the government encourages Chinese enterprises to "go out", which pushed the reform of the two institutions.

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