Policy bank plan gets mixed reaction

By Chu Daye Source:Global Times Published: 2014-12-12 0:03:01

Experts divided on need for new lender

Workers renovate a railway line connecting Handan in North China's Hebei Province and Changzhi in North China's Shanxi Province. Photo: CFP

The plan to set up a policy bank for the development of the Beijing-Tianjin-Hebei regional block in North China received a mixed reaction from experts on Thursday, following an earlier media report on the issue.

"The idea of a Beijing-Tianjin-Hebei development bank was not proposed by Hebei Province, nor Beijing or Tianjin - it is a national strategy," the Guangzhou-based 21st Century Business Herald quoted an unnamed Hebei official as saying in a report on Thursday.

Guidelines posted on the website of the Hebei provincial government on December 1 said that Hebei should push for a Beijing-Tianjin-Hebei development bank, to prioritize support for infrastructure and major projects. The guidelines also included measures aimed at promoting financial sector reform in the province.

Zhang Gui, deputy director of the Center for Beijing-Tianjin-Hebei Development Research at Hebei University of Technology, told the Global Times Thursday that a Beijing-Tianjin-Hebei development bank would be vital if Hebei is to shoulder some of Beijing's functions as a capital and absorb industry relocation by 2017.

"A policy bank could help smoothen the process of industrial relocation, and it could help with building infrastructure and auxiliary public services. This could assist the companies during the first few years after they move," said Zhang, who is also part of an advisory body set up by Hebei Province that provides ideas for decision-makers relating to the regional integration plan.

President Xi Jinping called for integrated and coordinated development of Beijing, Tianjin and Hebei at a seminar on regional development held in Beijing on February 26.

The Beijing-Tianjin-Hebei area had a combined GDP of over 6 trillion yuan ($980 billion) in 2013 and a total population of more than 100 million.

The National Development and Reform Commission is currently drafting an integration development plan for the three areas.

The integration push comes at a time when Beijing is facing urban problems such as pollution, while Hebei is struggling to upgrade its industrial structure and Tianjin is trying to reduce its dependence on property investment.

"Hebei does not necessarily have the facilities needed to accommodate ­companies that relocate from Beijing and Tianjin, and it cannot develop this in a short time frame without the support of a bank," Zhang said, referring to the building of industrial parks and public facilities such as schools and hospitals.

Despite the existing support from China Development Bank, Zhang believes a dedicated policy bank for the region is still needed.

By the end of the third quarter of 2014, Hebei Province had received a total of 151 billion yuan in loans from China Development Bank to finance infrastructure projects such as expressways and railways, according to the 21st Century Business Herald report.

However, some experts said such a bank would be unnecessary.

Tang Jianwei, a macroeconomic analyst with Bank of Communications, told the Global Times Thursday that China already has a sufficient number of policy banks.

The nation currently has China Development Bank, The Export-Import Bank of China, and Agricultural Development Bank of China to support large, time-consuming projects.

"There is no precedent [for setting up a new dedicated policy bank]," Tang said. "If the plan goes ahead, does that mean there should also be one policy bank each for the Yangtze River Delta and the Pearl River Delta?"

"The key for the Beijing-Tianjin-Hebei regional block is to create a synergy that taps the economic advantages of the two municipalities and one province. It is not about setting up more financing conduits, especially when the central government is tackling the local government debt issue," Tang said.

On October 2, the State Council released a new rule allowing local governments to issue bonds, in a bid to improve transparency and the management of debt.

Chinese local governments had accumulated total outstanding debt of 17.9 trillion yuan by the end of June 2013, up 67 percent from the end of 2010, according to official data.
Newspaper headline: Experts divided on need for new lender

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