Big Four banks to raise billions for Belt and Road
Reuters reports: “China’s largest state-owned commercial banks are raising billions to fund investment under Beijing’s ‘Belt and Road’ drive, people close to the matter said.” According to Reuters’ sources:
- China Construction Bank, “the country’s second-biggest bank by assets, has been conducting roadshows to raise at least 100 billion yuan ($15 billion) from onshore and offshore investors.”
- Bank of China, “the smallest of the country’s ‘Big Four’ lenders, aims to raise around 20 billion yuan ($3 billion).”
- The remaining two of the Big Four banks, “the top lending” Industrial and Commercial Bank of China and “third-ranked” Agricultural Bank of China, are also “considering raising Belt and Road funds.”
- Aside from supporting the government’s Belt and Road plans, raising yuan for overseas investment would further its internationalization, which would help conserve China’s foreign reserves and mitigate exchange-rate risk.
- One banker who spoke to Reuters put it this way: “Because those Belt and Road countries have close economic and trade ties with China, after they receive our yuan funds, they can use renminbi to pay for Chinese goods, equipment and labor.”
The fundraising is consistent with the updated rules on foreign investments that we noted last week. The rules ban funding of casinos, the sex industry, and anything that endangers China’s national security, limit investments in real estate, hotels, and sports teams, but actively encourage investments “that further the Belt and Road initiative and relevant infrastructure.”
In related news:
- The South China Morning Post says that “the Belt and Road unit at the China International Association for Promotion of Science and Technology” is helping to “secure deals for projects such as telecom networks in the Pacific island nation of Vanuatu and a road information system in New Zealand.”
- Bloomberg reports that Dalian Wanda, the company headed by billionaire Wang Jianlin 王健林, has “scrapped plans to buy a land plot in London for 470 million pounds ($606 million) amid the Chinese government’s intensifying scrutiny of overseas investments.”
Why Trump’s IP probe into China ‘misses the mark’
Rogier Creemers (a scholar of Chinese media and internet law, and editor of China Copyright and Media) has published an opinion piece about Donald Trump’s memorandum on trade with China that may be the start of an investigation into China’s alleged theft of American intellectual property.
Creemers argues that the Trump administration’s approach is going to “accomplish little apart from squandering political capital that could have been better employed elsewhere,” and recommends more effective ways for the U.S. to address the “numerous legitimate concerns for foreign businesses and governments” in their trade with China.