| | Financial Support from Chinese Government
Chinacables is a subsidiary of China National Machinery Industry
Corporation (SINOMACH), derived from the
Ministry of Machinery and Electric Industry of China. SINOMACH is a large scale,
state-owned enterprise group under the leadership of the State Assets
Supervision and Administration Commission. It have exported 70%
of power generation and transmission projects or equipments.
As the main company for China to export its heavy equipments and machinery for
power generation, transmission, telecommunication,
metallurgy, automobile, railway,
highway or road, China policy bank of China
Import-Export Bank will provide financial support to
Sinomach and its subsidiaries, including Chinacables,
for their projects in the foreign markets in these industries.
In order to widen Chinacables' business scopes,
it will cooperation with companies from Sinomach, such
as CMEC, to compete
in the world market for projects in power generation, transmission,
telecommunication, metallurgy,
automobile, railway, highway
or road or other projects which is eligible for Chinese government preferential
fund or loan support. According to China preferential
loan policy, policy banks will finance for
both Chinese export of mechanic and electronic products, complete
set of equipment, and high- and new-tech products and undertaking of
offshore construction contracts and overseas investment projects. Sinamach
and Chinacables, CMEC are eligible to apply these
loans and credits thanks to their technical, commercial
strength in the world construction market and their key status in China's
heavy machinery and equipment export section.
We usually provide three main financial supports for our projects in the
foreign countries upon sovereign guarantee, reputable
bank guarantee or other securities which are comfortable to us.
The three financial funds or credits are:
 | Chinese government preferential concessional
loan |
| Export buyer's credit |
| Export Seller's Credit |
For details, please visit our China
Import-Export Bank website.
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CHINESE GOVERNMENT CONCESSIONAL LOAN
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Basic Concept
| Chinese Government Concessional Loan refers to the medium and
long-term, low interest rate credit extended by the China Eximbank
under the designation of the Chinese Government, to the Government of
the Borrowing Country with the nature of official assistance.
| The Export-Import Bank of China is authorized by the Chinese
Government as the sole lender of the Concessional Loan.
Objective
| Promote economic development and improve living standard in
developing countries
| Boost economic cooperation between developing countries and China
Resource and Utilization of Funds
| China Eximbank raises funds in domestic financial market through
bond issuing. Chinese Government subsidizes interest rate difference.
| The Loan is mainly used to procure mechanical and electronic
products, complete sets of equipment, high tech product, services as
well as materials from China.
Main project sectors
| infrastructure
Such as energy, transportation, telecommunication
| Industrial
Such as manufacturing, mining etc.
| Social welfare
Such as health-care, housing etc.
Basic Criteria for Project
| The project should be approved by both the Chinese Government and
the government of the Borrowing country
| The project should be technically feasible and can generate
favorable economic returns
| The project should have good social benefits
| Chinese enterprises should be selected as contractor/exporter
| Equipments, materials, technology or services needed for the project
should be procured from China ahead of other countries. In principle,
no less than 50% of the procurements shall come from China.
Terms and Conditions of Loan
| Loan Amount
In principle, the Loan amount should be no less than RMB 20 million
(approximately USD 2.4 million).
| Loan Currency
The loan is denominated in Renminbi Yuan
| Borrower
Borrower is normally the Government of the Borrowing Country
represented by Ministry of Finance
| Interest Rate and Maturity Period
Interest Rate and Maturity Period are Fixed by Chinese Government and
stipulated in inter-governmental framework agreement
| Maturity Period
Maturity Period includes Grace Period and Repayment Period
| Grace Period
In Grace Period, the borrower shall pay the interest but no principal
| Availability Period = Drawdown period
Borrower can make drawdown within Availability Period. The
Availability Period is included in the Grace Period and matches the
implementation period of the project.
| Interest payment
Interest is calculated and paid semi-annually. Interest collection
dates are fixed on March 21st and September 21st every year.
| Principal repayment
In repayment period, the principal is repaid semi-annually in equal
installments. Principal repayment dates are fixed on March 21st and
September 21st every year
| Management Fee
Management Fee is calculated on the basis of the total amount of the
Loan and paid in one lump sum before the first drawdown
| Commitment Fee
Commitment Fee is calculated on the basis of the undrawn amount of the
Loan and paid on interest collection dates
Project Cycle
1 Application
| Candidate project can be proposed to the Chinese Government or China
Eximbank by Borrowing country based on development plan and strategy
| Documents required
* Application
* The approval of the Government of the Borrowing country
* Feasibility study report: containing the objective, scope and
content of the project and detailed information on technical,
economical and social aspects.
* The commercial contract or other intention agreements.
* Brief introductions and financial statements of the project
executing agency and Chinese contractors/ exporters.
2 Appraisal
| China Eximbank conducts appraisal at its own discretion
| Reports results to the Chinese Government
| Following aspects are analyzed during appraisal
* Objective and necessity of the project
* Technical, financial, economical and social aspects of the project
* Macro-economic situation and debt servicing ability of the Borrowing
Country
* Management capability and financial strength of executing agency.
* Qualification and performance records of Chinese
contractor/exporter.
3 Agreement
| Inter-governmental Framework Agreement is signed by two
Governments, specifying purpose, amount, maturity period and interest
rate of the facility
| Loan Agreement is signed by China Eximbank and Borrower in
line with inter-governmental framework agreement
4 Implementation and Disbursement
| Borrower makes drawdown according to Loan Agreement
| Implementation is essentially the obligation of the Borrower and the
executing agency
| China Eximbank monitors the implementation to ensure the efficient
use of funds
| The Borrower reports to China Eximbank progress of project, use of
funds and provides necessary assistance
| After project is completed, the Borrower sends a completion report
to China Eximbank
5 Operating and Debt Servicing
| Executing Agency has the responsibility to operate the project.
China Eximbank may monitor the project and offer advice when it is
necessary.
| The Borrower has the obligation to pay interest and fees and repay
the principal according to the provision of Loan Agreement.
| After a period of operation, China Eximbank makes Ex-post evaluation
on the project on a case by case basis.
Disbursement Procedures
Contact Information
Concessional Loan Department
The Export-Import Bank of China
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SELLER's CREDIT or Loans to Overseas Construction Contracts
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Loans to Overseas Construction Contracts (the Loan) refer to the loans,
either in Renminbi or foreign currencies, that the Bank provides to
Chinese enterprises for financing their construction projects implemented
in foreign countries, which may bring forth the export of Chinese
equipment, machinery, building materials, technology, and labor services.
The Loan is also applicable to Chinese contractors who win the tender in
the international bidding on the projects financed by the World Bank,
Asian Development Bank, and other international financial organizations.
Prospective Borrowers
Prospective borrowers of the Loan include Chinese enterprises that are
| Registered with the regional Administration of Industry and Commerce
and its local offices;
| Accredited with independent legal person status;
| Authorized to handle contract construction abroad; and
| Qualified with expertise, professionals and technology for such
operations. |
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Qualifications for Loan Application
1. The borrower should demonstrate fine management and operations, have a
sound financial position and a favorable credit standing, and should be
capable of repaying the principal and interest incurred;
2. The borrower has already signed a contract for undertaking overseas
construction projects, which, when necessary, should be accompanied with
authorization and approval by competent government authorities;
3. The spin-off exports of Chinese equipment, materials, technology, labor
service, and management services that derive from overseas construction
contracts should account for no less than 15% of the total value of a
specific project contracted;
4. The value of the overseas construction contract should be no less than
USD 1 million, with advance payment amounting to no less than 15% of the
total contract value in principle. In the case of deferred repayment, a
payment guarantee should be provided as acceptable to the Bank;
5. The overseas construction contract shall be expected to offer
satisfactory economic returns;
6. The contractor should have license and capability to perform the deal
sealed;
7. The host country should remain stable both politically and
economically;
8. In the case where repayment is assessed highly risky, appropriate
export credit insurance should be arranged as per the requirements of the
Bank;
9. Repayment guarantee acceptable to the Bank should be provided; and
10. Other requirement that the Bank deems to be of necessity.
Documents and Materials required for Loan Application
Documents and materials required for applying to the Bank for the Loan
include:
1. Loan application;
2. The contract for the construction project and authorization and or
approval by competent government authorities, if required;
3. Purchase contract and other commercial contracts related to the
construction project;
4. Analysis of economic returns and the cash flow statement of the
construction project that the borrower has signed to undertake;
5. A letter of intent for covering export credit insurance if such shall
be deemed necessary;
6. The borrower's license for undertaking construction projects overseas,
profile statements of both the borrower and the guarantor, a copy of the
business license of the borrower having passed the annual examination,
audited financial statements of the past three years and audited financial
statements of the recent period of the current year, and other documents
that demonstrate the credit standings and the operations of both the
borrower and the guarantor;
7. Letter of intent for repayment guarantee, or in case of mortgage or
pledge, valid certificates of ownership of the property under mortgage or
pledge and evaluation reports thereof; and
8. Other relevant documents demanded by the Bank.
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Export Buyer's Credit
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The Export Buyer's Credit refers to the medium and long-term credit
offered by the Bank to creditworthy foreign borrowers to support the
export of Chinese capital goods, services and overseas construction
projects. With a competitive interest rate and a longer period of time,
the Export Buyer's Credit can facilitate foreign importers to make prompt
payment to Chinese exporters for the exported products and services. The
operations generally follow the Arrangement on Guidelines for Officially
Supported Export Credits as developed by OECD.
1.Products and Services Covered by the Credit
Export Buyer's Credit is mainly extended to finance the export of Chinese
capital goods such as mechanic and electronic products and complete sets
of equipment. It is also available for financing the export of
Chinese-built ships, high- and new-tech products & services, and
overseas construction projects contracted by Chinese companies.
2.Requirements for Application
| The Borrower
The borrower should be a foreign importer, or the importer's bank,
or Ministry of Finance of or other authorized government institutions
of the importing country, and should be acknowledged by China Eximbank.
The borrower should have reliable credit standing, and should be
capable of repaying all the principals and paying the accrued
interests and related fees and charges of the loan as prescribed in
the agreed repayment schedule.
| The Exporter
The exporter should be an independent legal entity with the
acceptable qualification of dealing export operations or overseas
projects as verified by authorized Chinese government authorities, and
should be capable of implementing the commercial contract. The goods
and services exported should fall within the support list of Export
Buyer's Credit operated by China Eximbank.
| Commercial Contract
The commercial contract that seeks for export buyer's credit should
be examined and approved by the Bank, and should satisfy the following
requirements:
 | The value of the commercial contract should be more than USD 2
million.
| The portion of the Chinese content of exported goods should be
no less than 50% of the total value.
| The cash payment (down payment) made by the importer to the
Chinese exporter should not be less than 15% of the total contract
value or 20% in the case of ship export contract. |
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The requirement of the Chinese content portion and the down payment
percentage on overseas construction projects should be consistent with
relevant policies and guidelines set by the Chinese government.
Subject to the credit policy of the Bank, the borrower is required
to provide a repayment guarantee, and when necessary, a sovereign
guarantee of the importing country should be provided.
Whether it is necessary to apply for export credit insurance should
be decided by the Bank in accordance with the country risk of the
borrower.
3.Credit Terms and Condition
| Loan Currency
The currency of the loan could be either US Dollar or other
currencies acceptable to China Eximbank.
| Loan Amount
Generally, the Export Buyer's Credit provided by the Bank for an
export project of goods or services shall not exceed 85% of the total
contract value, and 80% in the case of a ship export contract. As for
an overseas contracting project, the loan amount should follow the
regulations of state relevant policies.
| Maturity Period
The maximum maturity period is 15 years from the date of the first
disbursement of the loan to the last repayment date as stipulated in
the loan agreement.
| Interest Rate
The interest rate could be either a fixed interest rate on the
basis of the Commercial Interest Reference Rate (CIRR) as monthly
announced by OECD, or a floating interest rate on the basis of London
Interbank offered Rate (LIBOR) plus a certain interest rate spread.
For special cases, the interest rate could be negotiated and decided
between the lender and the borrower.
| Drawdown of the Loan
The availability of drawdown under the loan agreement shall be
consistent with the terms and conditions of the commercial contract
related.
| Fees & Charges
The borrower shall pay management fees, commitment fees and
exposure fees to China Eximbank.
| Loan Application and Approval
An eligible borrower should submit a formal application to China
Eximbank for Export Buyer's Credit together with the following
documents and materials:
| Draft commercial contract or letter of intention, Tendering and
bidding documents, feasibility study report on the project and
relevant approval documents;
| Documentation that proves the credit standing of the borrower,
the guarantor, the importer and the exporter; the financial
statements of the borrower and the guarantor;
| Other documents and materials required by the Bank. |
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China Eximbank will examine the application documents submitted by
the borrower, confirm the qualification of the borrower and the
guarantor, decide credit terms and conditions, and start project
appraisal and approval process. Upon approval of the loan, China
Eximbank will sign with the borrower a loan agreement on Export
Buyer's Credit, and the guarantor will present to the Bank a Repayment
Letter of Guarantee.
| Loan Disbursement and Repayment
China Eximbank shall disburse the loan to the borrower as
prescribed in the loan agreement.
The borrower shall repay to the Bank the principal and pay the
interests together with relevant fees of the loan as stipulated in the
loan agreement. Unless otherwise specified, once the drawdown period
is over, the principal of the loan should be repaid semi-annually in
equal installments. The interests incurred should be either paid
semi-annually as calculated on the basis of the loan outstanding or
follow the terms stipulated in the loan agreement.
| Working Procedures
1. A commercial contract is signed
between the exporter and the importer. The value of the contract
should be no less than USD 2 million.
2. A loan agreement is signed between China Eximbank and the borrower.
The loan amount should not exceed 85% of the commercial contract value
while 80% in the case of a ship export project.
3. Repayment guarantee provided by the guarantor to China Eximbank may
be required according to the project case by case.
4. Whether to require export credit insurance or not shall be
determined by China Eximbank according to the country risk of the
importing country.
5. The down payment should not be lower than 15% of the commercial
contract value and no less than 20% for a ship export project.
6. The exporter delivers goods to the importer as stipulated in the
commercial contract.
7. China Eximbank disburses the loan after the delivery of the goods.
8. The borrower shall semi-annually repay to China Eximbank the
principal, the interests and all the fees and charges of the loan in
accordance with the provisions of the loan agreement
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