China Bank Seeks To Rival West’s Investors

This article is from the archive of The New York Sun before the launch of its new website in 2022. The Sun has neither altered nor updated such articles but will seek to correct any errors, mis-categorizations or other problems introduced during transfer.

The New York Sun

BEIJING — Given that Tibetan rioters were on the same day burning down Chinese-owned shops in Lhasa, the nugget that slipped out on a specialist business news Web site was never going to get worldwide attention.

The significance of its contents to China’s image was wholly at odds, too, with the old-fashioned pictures of paramilitaries fanning out to put down uprising by monks and suppress dissent. But its implications will reverberate in capitals around the world.

The March 14 nugget, on Sinocast.com, stated that China Development Bank (CDB), a name not long ago more familiar to environmentalists than to the Square Mile, had won formal approval for a revolution in its structure intended to see it listed on the stock market and turn itself into Beijing’s rival to the West’s biggest investing names.

The leak gave few details — such as when this listing will happen, or where it will take place, or how much it intends to raise. Readers were given not a picture of what CDB will look like after its reforms, but one more piece of a jigsaw being put together with extreme caution.

But then CDB’s record of creeping expansion, building strategic stakes in industries and countries around the world while remaining almost invisible, suggests that this is exactly its intention.

China Development Bank will come to the market armed with $20 billion of government money, and an investment record that analysts say is remarkable for a state-owned policy bank investing in government projects.

It will then — so it hopes — explode on the world, earning patriotic fervor at home and profits abroad by funding China’s new “go-out” strategy to assert its presence in the world’s resources and financial markets.

CDB first hit the headlines in Britain when it bought a 3.1% stake in Barclays Bank last July, to help it in a battle to buy ABN Amro. But its slow revolution from investing in local projects such as the controversial Three Gorges Dam to becoming an international player was already under way.

Its initials crop up in all sorts of international byways: there is its $5 billion Sino-African Development Fund, and its Sino-Venezuelan Fund established with the same cash pile. It has joint venture funds with Belgium and Italy. It has a stake in an Israeli fund investing in Israeli-China technology projects.

But what really made the world take notice was the secretive raid on shares in Rio Tinto by Chinalco, the state-owned aluminium miner and processor, in February. The $14.1 billion dawn assault was entirely financed by CDB, which also said it could if wanted guarantee the funds needed for an outright takeover. China’s planners were known to be nervous about the effect on commodity prices of BHP Billiton’s attempts to buy Rio Tinto, and with Chinalco also state-owned, it seemed a government assault on Western corporate interests had begun.

“You’re not going against a corporation. You’re going against a nation,” one Hong Kong-based analyst of Daiwa Institute of Research, Geoffrey Cheng, said at the time.


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