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CLASII » Chinese Banks
The Chinese banks that lend most to Latin America are the China Development Bank (80%) and the Export-Import Bank of China (16%). The rest of the loans come principally from the Industrial and Commercial Bank of China and the Central Bank of China, also known as the People’s Bank of China.
Between 2005 and 2015, the largest recipients of Chinese loans were Venezuela (52%), Brazil (17%), Argentina (14%), and Ecuador (12%). This is due to the fact that these loans are a good deal for China (despite the economic problems both in China and these countries) because they are tied to the contracting Chinese firms and the import of Chinese goods and services; and because for these borrowers, Chinese finance constitutes one of the few alternatives available in financial markets. For more information see CLASII Bulletin #3 (in Spanish).
Furthermore, Chinese banks in coordination with national banks (principally BNDES in Brazil) and multilateral banks (such as the World Bank and the Interamerican Development Bank) have established various joint funds to finance different types of projects in Latin America.
The most important Chinese banks in Latin America include:
China Development Bank (CDB)”
The CBD is the major global financier of infrastructure and natural resource extraction projects, especially in the construction of dams. Its mandate is to provide finance to projects aligned with the strategic objectives of the Five Year Plans defined by the National Congress of the People’s Republic of China. Its finances go to large projects in the areas of: electric power, road construction, railways, petroleum and petrochemicals, development of coal mines, telecommunications, agriculture and related industries, and public infrastructure.
The CBD grants credit (among other forms of finance) via: loans backed by petroleum, both to governments or national firms; financing to Chinese state companies to facilitate their expansion; and investments in Chinese companies that are active overseas through private funds. It does not provide concessional credit. The CDB has also financed Chinese state firms to acquire shares in foreign firms, especially for the extraction of natural resources, and has had an important role in the development of the oil sector in Brazil and Venezuela.
The CDB has played a determinative role in initiating various inter-bank associations, for example the BRICS New Development Bank (NDB).
Environmental and Social Guidelines
The CDB produces an annual report on Corporate Social Responsibility and in 2004 enacted the “CDB Manual on Evaluation of Loans,” which includes environmental evaluation of lenders and projects. The Manual is not public.
The CDB was the first Chinese state bank to sign on to the UN Global Compact and has participated in the iniciatives of the UN Program for the Environment on sustainable finance. However, the CDB is known as a bank with little desire to work with civil society, and has been questioned for its failure to publish its environmental policies.
China Export-Import Bank
The CEIB should develop an Annual Credit Export Plan that depends on the support of the State Council, according to the following priorities, among others: provide credit for the export and import of Chinese products, loans for overseas investment, concessional loans, international guarantees, and loans to foreign governments and international financial institutions. The CEIB is the principle Chinese financial entity in regards to the financing of dams.
Environmental and Social Guidelines
The China Exim Bank environmental and social evaluation policy was published in 2007 upon request by the Pacific Environment (a U.S.-based NGO). According to International Rivers, this policy is aligned with Chinese regulations such as the Law on Environmental Impact Assessments, the Law on Environmental Protection, and the Ordinance for Environmental Management in the Construction of Projects.
Industrial and Commercial Bank of China (ICBC)
Since 2007 the ICBC is the largest private bank in the world, with operations in more than 40 countries. Its investments are diversified among many sectors in China as well as abroad, including the hydrocarbon, mining, and hydroelectric dam sectors.
Environmental and Social Guidelines
The ICBC has a Corporate Social Responsibility (CSR) policy and has a specific department to serve the public. It publishes annual reports on CSR. The ICBC does not have its own environmental policies.
Key analysis:
Reports focused on analysis of environmental and social policies of Chinese banks:
- Emerging Sustainability Frameworks: China Development Bank and China Export-Import Bank. Friends of the Earth, 2016. Spanish.
- A Review of the Environmental and Social Policies of National Development Banks in Brazil, China, and India. Friends of the Earth and others, 2013.
- Environmental Record of Chinese Banks. Green Watershed, 2010.
- China Development Bank’s overseas investments: An assessment of environmental and social policies and practices. Friends of Earth, 2012.
- The New Banks in Town: Chinese Finance in Latin America. The Inter-American Dialogue. 2012.