China - Second Industrial Credit (Second China Investment Bank) Project

Document of CD i The World Bank FOR OFFICIAL USE ONLY Report No. P-3819-CHA REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT AND THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN IN AN AMOUNT EQUIVALENT TO USW1O5.0 MILLION AND A PROPOSED CREDIT OF SDR 65.8 MILLION TO THE PEOPLE'S REPUBLIC OF CHINA FOR A SECOND INDUSTRIAL CREDIT PROJECT May 16, 1984 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS Currency Unit =Yuan (Y) Calendar 1983 February 1984 $1.00 = Y 1.98 Y 2.06 Y 1.00 = $0.51 $ 0.49 The staff appraisal report is based on the internal settlement rate of $1 = Y 2.80. FISCAL YEAR January 1 to December 1 ACRONYMS BOC - Bank of China CIB - China Investment Bank DFC - Development Finance Company ICBC - Industrial and Commercial Bank of China MOF - Ministry of Finance NMP - Net Material Product PBC - People's Bank of China PCBC - People's Construction Bank of China  FOR OFFICIAL USE ONLY CHINA SECOND INDUSTRIAL CREDIT PROJECT (CHINA INVESTMENT BANK II) Loan/Credit and Project Summary -Borrower: People's Republic of China Beneficiary: China Investment Bank (CIB) Amount: $175.0 million equivalent, comprising $105.0 million equivalent IBRD and SDR 65.8 million ($70.0 million equivalent) IDA. Terms: Loan: 20 years, including 5 years grace; standard variable interest rate. Credit: Standard Relending Terms: Loan and Credit: 20 years, including 5 years of grace; fixed interest rate of 7.0% p.a., plus commitment fees equal to those under the loan and credit; the Government would bear the interest rate risk on the Bank loan and the foreign exchange risk between the US dollar and (a) the currency pool for the Bank loan and (b) the SDR for the IDA credit. Subborrowers would bear the foreign exchange risk between the US dollar and the Yuan. Project Dtscription: The project furthers the development of CIB, which pro- vides investment loans for small- and medium-size indus- trial projects needing foreign exchange. The objective would be to help raise investment efficiency through import of technology and the introduction of improved project design and selection methodology. Subborrowers would be some 60-80 state and collective enterprises primarily in coastal provinces and municipalities. Based on the experience under CIB I, the investments are expected to have high financial and economic returns. The main project risks relate to the capacity of CIB, which is a young institution, to strengthen its appraisal standards, especially in the technical, economic and marketing areas, and to the need for continued government commitment to CIB within the process of economic reform. However, the project provides for recruitment of additional technical and economic staff, plus training and marketing consultancy for CIB. This will further strengthen CIB's ability to identify and evaluate projects. Furthermore, the Government's commitment to economic reforms and to CIB remain firm. T his document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  - i~i - Bank FY 1985 1986 1987 1988 1989