China's Superbank Debt, Oil and Influence - How China Development Bank is Rewriting the Rules of Finance

Author: Henry Sanderson; Michael Forsythe
Publisher: John Wiley & Sons
ISBN: 9781118176368
Published In: October 2012
Format: Hardback , 250 pages
Jurisdiction: China, International ? Disclaimer:
Countri(es) stated herein are used as reference only

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Inside the engine-room of China's economic growth—the China Development Bank

Anyone wanting a primer on the secret of China's economic success need look no further than China Development Bank (CDB)—which has displaced the World Bank as the world's biggest development bank, lending billions to countries around the globe to further Chinese policy goals. In China’s Superbank, Bloomberg authors Michael Forsythe and Henry Sanderson outline how the bank is at the center of China's domestic economic growth and how it is helping to expand China's influence in strategically important overseas markets.

100 percent owned by the Chinese government, the CDB holds the key to understanding the inner workings of China's state-led economic development model, and its most glaring flaws. The bank is at the center of the country's efforts to build a world-class network of highways, railroads, and power grids, pioneering a lending scheme to local governments that threatens to spawn trillions of yuan in bad loans. It is doling out credit lines by the billions to Chinese solar and wind power makers, threatening to bury global competitors with a flood of cheap products. Another $45 billion in credit has been given to the country's two biggest telecom equipment makers who are using the money to win contracts around the globe, helping fulfill the goal of China's leaders for its leading companies to "go global."

Bringing the story of China Development Bank to life by crisscrossing China to investigate the quality of its loans, China’s Superbank travels the globe, from Africa, where its China-Africa fund is displacing Western lenders in a battle for influence, to the oil fields of Venezuela.

Offers a fascinating insight into the China Development Bank (CDB), the driver of China's rapid economic development
Travels the globe to show how the CDB is helping Chinese businesses "go global"
Written by two respected reporters at Bloomberg News

As China's influence continues to grow around the world, many people are asking how far it will extend. China’s Superbank addresses these vital questions, looking at the institution at the heart of this growth.

Preface ix

Acknowledgments xix

Chapter 1 Let 10,000 Projects Bloom 1

The Wuhu Model 4

The Chongqing Model 9

Global Financial Crisis 12

A Town Called Loudi 15

Li’s Story 18

“Manhattan” in China 22

Credit Risk in a One-Party State 26

Cracks in the System 29

Chapter 2 Turning a Zombie Bank into a Global Bank 39

A Life in the Party 41

The Princeling Party: The Beginning of State Capitalism 50

Taking Over a Basket Case 55

Transforming CDB from an ATM Machine 58

Developing a Slogan 62

Beating the Commercial Banks 64

Gao Jian: Creating a Market for “Risk-Free” Bonds 68

The West Self-Destructs: The Financial Crisis 72

Moving Beyond Wall Street 75

Chapter 3 Nothing to Lose but Our Chains: China Development Bank in Africa 85

Made in Ethiopia 90

Ethiopia’s Zone: Exporting to the West 94

ChinaAfrica Development Fund: The State’s Private Equity Arm 96

Rising Role of China in Africa 101

Fixed Capital: Western-Style Lending 105

African Tiger: Can Ghana Escape the Resource Curse? 108

Fresh Capital 116

Chapter 4 Risk versus Reward: China Development Bank in Venezuela 123

Default in Bolívar’s Country 125

China’s Venezuelan Adventure 126

Loans for Oil 132

Cars, Housing, and Gold: Good Business for China 136

Ecuador 139

Russia 140

China in the Backyard of the United States 141

Chapter 5 Funding the New Economy 147

Obama’s Dream 151

Default-Free Bond Market 153

Financing China’s Global Company: Huawei 157

The Final Frontier: Private Equity 163

Acting as a Gatekeeper 167

Imprint of the State 169

Chapter 6 The Future 175

About the Authors 181

Index 183

HENRY SANDERSON has been a reporter for Bloomberg News since April 2010. Prior to that, he was a reporter for the Associated Press in Beijing and Dow Jones in New York. While at Bloomberg, Sanderson has covered corporate finance, focusing on China's banks, the bond market, and the emergence of the yuan as an international currency. He is a graduate of the University of Leeds (with a BA in Chinese and English literature) and Columbia University (with a Master's in East Asian Studies).

MICHAEL FORSYTHE has been a reporter and editor for Bloomberg News since 2000. Prior to that, he was an officer in the U.S. Navy for seven years, serving on ships in the U.S. 7th Fleet. The highlight of his career in Washington was overseeing Bloomberg's coverage of the historic 2008 presidential election. Since returning to Beijing in 2009, Forsythe has focused on policy and politics, with particular emphasis on the international impact of "China Inc." He is a graduate of Georgetown University (with a BA in International Economics) and Harvard University (with a Master's in East Asian Regional Studies).