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Press Releases

NR2000-29
October 23, 2000

Overseas Economic Cooperation Operation

SUPPORTING INFRASTRUCTURE IMPROVEMENT IN CHINA
- First Special Yen Loans to China in the amount of 17,202 Million yen -

  • 1. Japan Bank for International Cooperation (JBIC; Governor: Hiroshi Yasuda) decided to extend two ODA loans totaling up to 17,202 million yen to the People's Republic of China, and signed loan agreements today. With these loans, the cumulative ODA loan approvals for China number 260, totaling 2,470,712 million yen. The proceeds of the loans, which are the first Special Yen Loans to China, will be applied to the implementation of "Beijing Urban Railway Construction Project" and "Xi'an Xianyang International Airport Terminal Expansion Project".
  • 2. China enjoyed steady and stable economic growth in recent years under the reform and open-up policy. However, with the eruption of the Asian currency crisis, both exports and foreign direct investment, which were driving force behind the economic development, took a major plunge and the thus-far robust growth rate lost its steam. Although China's exports and foreign direct investment are showing signs of recovery entering the second half of 1999, problems such as deteriorating employment and feet-dragging reform of the state-owned enterprises and financial sector still remain unsolved. Meanwhile, the Japanese government acknowledges that keeping and developing firm and cooperative ties with China would largely contribute to achieving peace and stability in Asia and Pacific region, including Japan. In line with this stance, JBIC is studying what kind of cooperation and assistance is possible to help economic development in China, while comprehensively taking account China's needs for aid, socio-economic situation, and technological/economic viability of individual projects.
  • 3. The loans concluded for "Beijing Urban Railway Construction Project" and "Xi'an Xianyang International Airport Terminal Expansion Project" were approved under the Special Yen Loan scheme created in December 1998. They are the first Special Yen Loans that JBIC extends to China. These loan commitments are expected not only to encourage the Japanese firms to take part in the projects in China, but also to help bring the country's economy to the recovery track by stimulating economy and creating employment. It is further hoped that the loans will help improve distribution, thereby contributing to promoting structural reform of the Chinese economy.

(For Reference) Trends in ODA Loans to China
Japan's ODA loans to China may be traced back to the statement in 1979 by then Prime Minister Masayoshi Ohira that Japan would cooperate as much as possible in the modernization of China. The first ODA loan to China was extended in April 1980. This fiscal year therefore marks the 20th anniversary of the start of the loans. In the beginning, the loans were primarily channeled into the railways, ports, and electric power sectors, that is, the transportation and electric power sectors, with the intent of eliminating bottlenecks in infrastructure. Along with the economic growth of China, however, changes have been demanded in the approach taken in ODA loans. The assistance provided has expanded from large-scale infrastructure to projects having a direct effect on the public life. In particular, in the fourth round of ODA loans to China provided from FY1996 on, 46 percent under the approval number of commitments, and 28 percent under the approval amount of commitments, went into environmental projects aimed at improvement of the global environment and residential environment. In particular, consideration was given to increasing cooperation in the institutional building and strengthening organizations, and other areas of know-how making use of the experiences of Japan in combating pollution in the late 1960s and early 1970s.

The target projects and loan conditions of the Special Yen Loans are as follows.

Loan Amount and Conditions

Project NameAmount
(Million yen)
Interest Rate
(%, p.a.)
Prepayment
Period/Grace Period
(Years)
Tying Status
Goods &
Services
Consulting
Services
Goods &
Services
Consulting
Services
Goods &
Services
Consulting
Services
Beijing Urban Railway Construction Project14,1110.95*-40/10-Japan Tied-
Xi'an Xianyang International Airport Terminal Expansion Project3,0910.95*-40/10-Japan Tied-
Total (2 Commitments)17,202

* Special Yen Loan Project


  • [1] JCF was established in November 2004 by Japanese private firms and JBIC to purchase greenhouse gas (GHG) emission reduction credits generated from CDM and Joint Implementation (JI) projects implemented in developing countries and countries with economies in transition (EIT countries) and offer consulting services on the purchase of emission reduction credits.
  • [2] The Clean Development Mechanism (CDM) allows industrialized countries to undertake joint projects that reduce GHG emissions with developing countries. The investor countries (industrialized countries) may use GHG emission reduction credits generated from these projects to meet their own emissions reduction targets. CDM, Joint Implementation (JI) and Emission Trading form the Kyoto Mechanisms.
  • [3] A project jointly implemented by Pak-Arab Fertilizer and Mitsubishi Corporation to decompose Nitrous Oxide (N2O) which is the by-product of the production process of Nitric Acid (HNO3).
    (http://cdm.unfccc.int/Projects/DB/TUEV-SUED1155134039.49/view.html)

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