IFC is helping China's private sector extend its reach in underdeveloped regions and new sectors. We use a combination of investments and advisory services to support private sector development in the country. Since 1985, we have made investments in more than 120 private sector companies in China, and this is one of the fastest-growing countries in our portfolio.
A key part of our strategy in the country includes addressing regional imbalances by supporting rural and underserved areas. We are also enhancing the sustainability performance of the emerging private sector by introducing international best practices. Key areas include environmental impact, labor conditions, health and safety standards, energy efficiency, and corporate governance.
In June 2007, IFC Executive Vice President and CEO Lars Thunell visited some of the country's underdeveloped regions. He also sought government support to raise local financing and met with key partners to strengthen energy efficiency and international investment partnerships.
Supporting Underdeveloped Regions
While visiting Urumqi, capital of the Xinjiang Autonomous region, Thunell met with stakeholders of IFC Business Edge, the brand name for the Corporation's international range of management training products. The program aims to develop the management training market to meet the needs of small and medium enterprises in western China. The region, one of the country's most underdeveloped, is a priority area for IFC, and the shortage of local managerial talent is one of the biggest constraints to its development.
About 40 percent of IFC investments in China are in underdeveloped regions. In November 2006, we provided a 320 million Chinese renminbi (about $42 million) loan to Fosun Pharmaceuticals, a leading Chinese manufacturer and distributor of Chinese and Western medicines. The loan enables the company to bring jobs and investment to interior, less-developed parts of China, such as Sichuan and Guangxi provinces. It also helps expand production of Fosun's anti-malaria products for Africa. Similarly, in October 2006, we invested $10 million in Epure to help the company expand its water and wastewater treatment capacity in underdeveloped areas, including Jilin, Yunan, Hubei, and Inner Mongolia.
Supporting Energy Efficiency
IFC recently took a major step to support environmentally and socially sustainable investments and improve financing for energy efficiency projects. During his trip, Thunell signed key agreements with Bank of Beijing, one of China's leading city commercial banks, and the Export-Import Bank of China, a state financial institution.
IFC will help Bank of Beijing develop market access in financing energy efficiency and international trade. Through its China Utility-Based Energy Efficiency Finance Program, IFC will provide a risk-sharing facility, enabling Bank of Beijing to leverage an overall loan portfolio of 300 million renminbi ($39 million) in energy efficiency projects. Most of the lending will go to energy companies that offer such services as industrial boiler retrofitting, wasted heat recovery, installation of heating co- and tri-generation, and optimization of industrial energy use. The energy efficiency finance program is cofunded by IFC, the Global Environment Facility, and the Finnish government.
IFC and China EXIM Bank will strengthen their cooperation in supporting environmentally sustainable investments in emerging markets, including China itself, thus advancing economic development and alleviating poverty. The two institutions will partner to provide investment and advisory services in environmental protection, energy efficiency, and sustainable finance.
Other Sustainable Investments
Thanks to an IFC senior loan of up to $22 million, Zhongda Sanchuan, a local hydropower development company based in Zhejiang, is constructing three run-of-river hydropower stations along the White Water River in the Yunnan Province, a region in the southwest. This project, IFC's first renewable energy investment in China, supports the government's national policy objectives to develop small hydro projects as a substitute for coal-fired power generation and to develop regions where economic development lags behind the rest of the country. The hydro stations will generate a total of 78 megawatts of electricity. The project will help ease power shortages and will reduce greenhouse gas emissions by 8 million tons over 30 years of operations.
IFC's investments are also supporting sustainability in the agribusiness sector. Deqingyuan is an IFC client that uses modern technology and produces high-quality eggs. IFC is supporting the company's effort to establish nationwide environmental and food safety standards for the industry. IFC has also helped the company create systems to capture methane from chicken litter, preventing the release of a potent greenhouse gases and providing an additional revenue stream from carbon financing.
Commitment to China and the Region
IFC's ongoing commitment to China and the region as a whole is reflected in efforts to build stronger client relationships locally. In June, IFC held an historic meeting of its senior management in Hong Kong, marking the first time the group has met outside its Washington D.C. headquarters. The group, along with management teams from East Asia and Pacific and South Asia, discussed progress on the IFC 2010 strategy, an initiative to decentralize operations, helping IFC deliver greater development impact and serve clients in more efficient ways.
For more information contact:
Andrew Mak
Communications Officer
Hong Kong
Phone: +852 2509 8110
E-mail: amak@ifc.org
Published July 10, 2007
