Beijing, June 23, 2006 AEST (ABN Newswire) - Asian Development Bank (ASX: ATB) is assisting the People's Republic of China (PRC) in formulating strategies in using foreign capital during the 11th Five-Year Plan (2006-2011) period.
As the PRC's economy has grown rapidly over the past two decades, the lending criteria of international financial institutions (IFIs) are getting rigid and the borrowing costs are rising. The size of the PRC's borrowing from IFIs are projected to remain unchanged or shrink while the demand for international commercial financing would increase dramatically in the 11th Five-Year Plan period.
To discuss the utilization of international commercial financing, ADB and the National Development and Reform Committee (NDRC) of the PRC jointly held an international seminar on Tuesday. At the event, about 80 participants including international experts, national consultants, and government officials at all levels shared international experiences and lessons.
"There are uncertainties and risks in borrowing international commercial loans in the PRC. For instance, increasing loans from international commercial institutions will have a negative effect on the effectiveness and efficiency of the monetary policies," says Toru Shibuichi, Country Director of ADB's Resident Mission in the PRC.
"Moreover, rapid inflow and outflow of short-term international capital, such as bonds or securities, will shake the banking system and capital market. This seminar aims to assess these potential issues by learning experiences from neighboring countries like the Republic of Korea and Thailand."
To mitigate risks and cushion the negative impact of increasing international commercial financing in the PRC, ADB has taken several steps such as introducing an early warning system, providing loans and equity investment in the private sector as leverage, and issuing a local currency ("Panda") bond.
This seminar is part of an ADB-funded technical assistance project to support the preparation of the 11th Five-Year Plan. The TA commenced at the start of this year and is backed by a grant for US$500,000 approved in 2005.
Among its activities, a series of seminars from 16 to 20 June focused on overseas investment and regional cooperation, utilization of international financial institution loans, and international commercial loans. Draft mid-terms reports of the TA's findings have been discussed during the seminars.
As a multilateral financial institution in Asia and the Pacific, ADB has provided 489 technical assistance projects totaling $257 million, mostly used to support policy reforms, capacity building and knowledge-based products.
Contact
Tsukasa Maekawa
Email: tmaekawa@adb.org
Tel:+632 632 5875; Mobile: +63917 625 1351
Graham Dwyer
Email: gdwyer@adb.org
Tel:+632 632 5253; +632 898 3413; +63 915 741 4363
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