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 (Image Courtesy: g20chn.org)
Undeterred by US President Trump initiatives to rock the world trade, China has not slowed down its debt-driven globalization.
Chinese companies’ strong appetite for foreign currency debt has reached a new high with Export-Import Bank of China unveiling its $30 billion debt raising plan. This closely follows another Chinese public sector bank's move to mop up $ 20 bilion debt in tranches.
China Eximbank has sounded investors with its plan to mobilize up to $27 billion by issuing medium term notes (MTNs) in installments this year. This is in addition to $ 3bn short-term debt being raised through issue of commercial paper.
On 23 November 2016, China Eximbank had issued euro-denominated bonds totaling EUR 2 billion in the offshore market. This constituted the largest single issuance ever of euro-denominated bonds by a Chinese mainland entity in the international market.
As a Policy Bank, it provides loans to Chinese firms for foreign trade and supports their “going global” endeavors. The loans include export credit, import credit, loans for offshore contracts and overseas investment, Chinese government concessional loans and preferential export buyer’s credit and special loans designated by the State Council. It also extends concessional loans to borrowers in developing countries selected by the Chinese government.
In its offering circular (OC) dated 29th May 2017 issued to investors, China Eximbank says it mainly supports the following areas: “foreign trade and cross-border investment, attraction of foreign companies, products and services into the Chinese market, support to Chinese companies and their products and services to go global, as well as areas which are conducive to enhancing international competitiveness and opening-up level of China”.
As put by OC, the Bank also supports “the Belt and Road Initiative, international industrial capacity and equipment manufacturing cooperation, infrastructure connectivity, energy and resources and other areas of international cooperation”.
China Eximbank intends to use the net proceeds from the sale of the Notes for general corporate purposes or for specific purposes to be disclosed later in the relevant Pricing Supplement for MTN tranche.
According to OC, China Eximbank has “conducted its business and may conduct business in the future in countries that are the subject of economic sanctions imposed by the United Nations, the U.S., the European Union and the governmental authorities of other jurisdictions from time to time.”
The Bank has pointed out that its business in countries, which are the subject of UN, US & other economic sanctions, represents an insignificant percentage of its consolidated assets, revenues and profits. 
The Bank has assured prospective bonder subscribers that it will not utilized the proceeds of MTN issue to support any project that is in, or related to, countries that are the subject of such economic sanctions.
It adds: “The fact that China Eximbank’s business in certain countries that are the subject of such economic sanctions might adversely affect your investment in the Notes”.
In April this year, Industrial and Commercial Bank of China’s (ICBC’s) Singapore Branch issued OC, intending to raise $20bn through issue of MTNs in installments.
ICBC, whose controlling stake is held by governmental entities, says it will utilize the net proceeds from each issue of MTNs “to finance its operations and for its general corporate purposes”.
Several Chinese companies mobilize global debt finance through subsidiaries incorporated in Cayman Islands, which is both a tax & corporate opacity haven. 
China Opportunity International Limited (COIL), for instance, was incorporated in the Cayman Islands as an exempted limited liability company during November 2016. It is not required under Cayman Islands law to prepare annual financial statements or have its financial statements audited.
COIL had issued an amended base prospectus for raising $5 billion debt in March this year. It will use proceeds of the issue to purchase bonds issued by Local Governments or the Ministry of Finance. Such “PRC bonds” are traded on the Chinese interbank bond market.
Another instance of Cayman Island-facilitated Chinese’s globalization initiative was recently taken by Lenovo Group Limited. This information technology giant incorporated Lenovo Perpetual Securities Limited (LPSL) in the Island during February 2017. And next LPSL issues perpetual securities in the form of cumulative preferred shares to raise $850m.
In its OC dated 9th March 2017, LPSL disclosed that the proceeds of the issue would be used to “repay some or all of the amounts outstanding under the promissory note issued to Google Inc. in relation to the Company’s acquisition of Motorola Mobility and for the Company’s working capital and general corporate purposes.”

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