China uses loans to adjust economy

China's banking regulator says many more bank loans were offered in the country's less developed western regions than in its richer eastern areas during the first three quarters of this year. This is a strategic move in a bid to adjust national economic balance.

Oriental Electrics, a company from southwestern Sichuan Province, was fortunate enough to haul in an 800 million US dollar order from Indonesia last year. The amount is the turbine maker's biggest international transaction ever. But unluckily, the global financial crisis caused the Indonesian buyer to struggle with capital. The deal was postponed a number of times. That's when the Bank of China stepped in, after research, and offered the purchaser 460 million US dollars of export credit.

Bai Zhizhong, Manager of Bank of China, Sichuan Branch said "The buyer was short of cash. So our bank worked as a bridge between the buyer and the seller, and facilitated the deal."

In the first three quarters, among the top five provinces with highest increase in bank loans, four were in western China, helping lessen the nation's geographical economic imbalance.

As to loans in the eastern coastal regions, many were directed at helping export companies explore the domestic market.

Guangzhou Guoguang Electronic used to be an OEM exporter. Sinking overseas options have pushed the firm toward the domestic market. That was not an easy decision.

He Weicheng, General Manager of Guoguang Electronics, Speaker Department said "Turning to the domestic market can cost a lot. We may have to spend 3 to 5 years, and more than 200 million yuan."

It turned out that Guoguang did not spend that much. The Bank of Construction offered an integrated finance service called "Domestic Trade Pass." The move helped the company acquire a well-known local speaker brand. That means Guoguang now has access to more than 1,000 retail outlets across the country.

He Weicheng said "We used to export 98 percent of our products. Next year, our target is to sell 30 percent of them domestically."

Liu Jun, Deputy Head of Bank of Contruction, Guangdong Branch said "Three weeks after we launched the "Domestic Trade Pass" service, we were dealing with customer demand worth 3 billion yuan."

According to the Chinese banking regulator, Guangdong, Jiangsu, and Zhejiang ranked as the top three provinces in new bank loans during the first three quarters. Loans to small and medium-sized firms increased the most.