China Development Bank to open offices in Brazil, Russia, Egypt
China Development Bank Corp., the government-run bank for public works projects, plans to open offices in Russia and Egypt this year and Brazil next year as part of its strategy to become an international lender.
The branches will be in Moscow, Cairo and the Rio de Janeiro area, Vice President Li Jiping told a press conference. The Beijing-based bank agreed in May to lend $10 billion to Brazil’s state-controlled oil company, helped finance a fund in Africa and extended loans in June to Russia’s development bank.
Chinese Premier Wen Jiabao said on July 20 that the nation’s more than $2 trillion of foreign-exchange reserves should be used to help companies invest abroad. China’s “going out” strategy is also designed to help ensure the nation has access to the resources needed to sustain the fastest economic expansion among the world’s 20 largest economies.
The bank agreed to lend $1.3 billion to Vnesheconombank, Russia’s state development bank, the Moscow-based lender said June 14. The two banks signed another contract on a $310 million loan to fund a cement plant in the St. Petersburg region, according to a separate statement.
The China-Africa Development Fund, which has helped finance a cotton planting and processing facility in Malawi and power station in Ghana, was set up in June 2007 with an initial $1 billion from China Development Bank.
The branch in Brazil will invest in ports, steel mills and energy, Rio de Janeiro state Governor Sergio Cabral said on June 30. The bank also has expressed interest in investing in projects related to the 2014 World Cup soccer tournament and Rio’s bid for the 2016 Olympics, Cabral said in a statement. The city is home to Petroleo Brasileiro SA, which is considering buying Chinese equipment in return for further loans, and Vale SA, the world’s largest iron-ore producer.
China, the world’s third-biggest economy, became Brazil’s leading trade partner this year after the global recession choked sales to the U.S. The two countries’ central banks are studying a proposal to use their own currencies — the real and the yuan — in bilateral trade instead of the U.S. dollar.
Leaders of Brazil, Russia, India and China — the so-called BRIC nations — called for a “more diversified” monetary system to reduce dependency on the U.S. dollar at a June 16 meeting in the Russian city of Yekaterinburg.
China Development Bank’s profit tumbled 28 percent last year on higher loan losses as the nation’s economic growth slowed. The bank, which had 3.8 trillion yuan ($556.3 billion) of assets at the end of 2008, received a $20 billion capital injection from the government in December 2007 and is seeking to become a commercial lender. The Ministry of Finance owns 51.3 percent of the bank and Central Huijing Investment Co., a unit of China’s $200 billion sovereign wealth fund, holds the rest.