China Plans Billions of Yuan to Support Equipment Making Industry
Resource from: machine.2456.com Likes:2920
Apr 06,2007
China Plans Billions of Yuan to Support Equipment Making Industry
While getting loans from financial institutes has been a common problem for many equipment builders in China, the Chinese government reportedly has plans to establish a multi-billion RMB fund.
According to a report by a Chinese newspaper The Economic Observer, this is suggested in a new report by a team jointly led by a relevant office under the National Development and Reform Commission (NDRC) and China Development Bank (CDB) for the purpose of lessening the burden of debts of Chinese equipment manufacturing enterprises while promoting corporate restructuring and proprietary innovation.
The proposed scale of the 10-12 year fund is RMB50 billion, most of which will come from the CDB, and the rest will be raised publicly, including funds from regional authorities, the report adds, with reference to sources who took part in the research and drafting of the plan.
"A very important move"
"This is a very important move," Wu Shengfu, President of China First Heavy Industries (CFHI), a heavy-duty equipment maker in China, was quoted as saying.
He added, "The financial evaluation system and the loan approving system is not favorable to the development of enterprises in the equipment manufacturing industry, taking into account the industry's unique characteristics and market environment. As a result, many enterprises are suffering from a high debt ratio.
"In the equipment manufacturing industry, research funds and startup capital are generally very high. If an enterprise does not have sufficient cash flow, and if it cannot receive loans either, it will hardly further grow."
Sources who took part in the research and drafting of the plan added that the industry fund would be some kind of soft loan. In addition to offering a below-market rate of interest, it would also allow enterprises to use the loan freer.
Foreign investment may be accepted
A committee led by the CDB will be established to monitor the use of the fund. However, whether the fund accepts foreign investment remains undecided. According to analysis, chances are not closed provided that the involvement of foreign investment causes no threat to national economic security.
(machine.2456.com)
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