IFC was at the vanguard of foreign investors’ first forays into the Chinese banking market, starting with technical advice in the 1990s and later expanding to investments. We took equity stakes at a time when most other commercial banks were still reluctant to put money into the Chinese banking sector.
Chinese banks, in particular city commercial banks, rural banks, and microfinance institutions, have been seen by many as challenging, at times saddled with non-performing loans, poor capital adequacy ratios, and insufficient management systems.
IFC is among the first foreign investors supporting China’s city commercial banks and rural finance institutions. We partner with them and with industry associations to improve corporate governance, risk management, and commitment to expanding financing for small and medium enterprises, farmers, manufacturers, and shop owners.
Our work with Chinese banks also includes offering market-based climate-change financing solutions. Under the innovative China Utility-based Energy Efficiency Finance program (CHUEE), IFC shoulders some of the financial risk by guaranteeing commercial bank loans for energy efficiency projects and assisting in assessing and implementing energy efficiency projects.
We are now expanding the successful model of China-IFC cooperation across East Asia, entering into similar partnerships with Vietnam, the Philippines, and Bangladesh and facilitating South-to-South cooperation to build on China‘s expertise and experience.