Financial Support from Chinese Government

Chinacables is a subsidiary of China National Machinery Industry Corporation (SINOMACH), derived from the Ministry of Machinery and Electric Industry of China. SINOMACH is a large scale, state-owned enterprise group under the leadership of the State Assets Supervision and Administration Commission. It have exported 70% of power generation and transmission projects or equipments. As the main company for China to export its heavy equipments and machinery for power generation, transmission, telecommunication, metallurgy, automobile, railway, highway or road, China policy bank of China Import-Export Bank will provide financial support to Sinomach and its subsidiaries, including Chinacables, for their projects in the foreign markets in these industries.

In order to widen Chinacables' business scopes, it will cooperation with companies from Sinomach, such as CMEC, to compete in the world market for projects in power generation, transmission, telecommunication, metallurgy, automobile, railway, highway or road or other projects which is eligible for Chinese government preferential fund or loan support. According to China preferential loan policy, policy banks will finance for both Chinese export of mechanic and electronic products, complete set of equipment, and high- and new-tech products and undertaking of offshore construction contracts and overseas investment projects. Sinamach and Chinacables, CMEC are eligible to apply these loans and credits thanks to their technical, commercial strength in the world construction market and their key status in China's heavy machinery and equipment export section.

We usually provide three main financial supports for our projects in the foreign countries upon sovereign guarantee, reputable bank guarantee or other securities which are comfortable to us. The three financial funds or credits are:

	Chinese government preferential concessional loan
	Export buyer's credit
	Export Seller's Credit

For details, please visit our China Import-Export Bank website.

Export Seller's Credit for Equipment

Export Seller's Credit for Equipment (hereto the Loan) refers to the loans, denominated either in Renminbi or foreign currencies, provided by the Bank to Chinese companies to support their export of complete sets of equipment, single units and related technical services. This credit also provides support to Chinese contractors who are successful bidders to projects undertaken in China that are nevertheless financed by the World Bank, Asian Development Bank, and other international financial organizations, and onlent loans from foreign governments.

Prospective Borrowers

Prospective borrowers of the Loan include Chinese enterprises that are

● Registered with the regional Administration of Industry and Commerce and its local offices;

● Accredited with independent legal person status; and

● Authorized to export complete sets of equipment, mechanical and electronic products.

Qualifications for Loan Application

1. The borrower should be an equipment manufacturer or a proxy exporter that demonstrates appropriate production capacity, contract performance capability, fine management, sound financial status, reputed credibility standing, and the capability to repay the principal and interest incurred;

2. The borrower has already signed an export contract, which, when necessary, should be accompanied with authorization and approval by competent government authorities;

3. The export contract value should be no less than USD 1 million, while the advance payment by the importer shall amount to no less than 15% of the total contract value in principle;

4. In the case of deferred payment, a payment guarantee acceptable to the Bank should be provided for the amount overdue;

5. The importer should have a strong financial status and reliable credit standing, devoid of any defective records in its performance;

6. For projects assumed risky, export credit insurance should be arranged in accordance with the requirements of the Bank;

7. A repayment guarantee acceptable to the Bank should be provided; and

8. Other requirements that the Bank deems to be of necessity.

Documents and Materials Required for Loan Application

1. Loan application;

2. The equipment export contract and the approval documents from the competent government authorities, when required;

3. Exchange memos for aged repayment collected, a payment guarantee for aging payments receivable, and a security for payment of the amount overdue;

4. Cash flow statement of the export project and analysis of economic returns;

5. A letter of intent for covering export credit insurance if such is deemed necessary;

6. The borrower's license of export, profile statements of both the borrower and the guarantor, a copy of business license of the borrow having passed the annual examination, audited financial statements of the past three years and audited financial statements of the recent period of the current year, and other documents that demonstrate the credit standings and operations of both the borrower and the guarantor;

7. A letter of intent for repayment guarantee, or in case of mortgage or pledge, valid certificates of ownership of the property under mortgage or pledge and evaluation reports thereof; and

8. Other relevant documents demanded by the Bank.

Loans to Overseas Construction Contracts

Loans to Overseas Construction Contracts (the Loan) refer to the loans, either in Renminbi or foreign currencies, that the Bank provides to Chinese enterprises for financing their construction projects implemented in foreign countries, which may bring forth the export of Chinese equipment, machinery, building materials, technology, and labor services. The Loan is also applicable to Chinese contractors who win the tender in the international bidding on the projects financed by the World Bank, Asian Development Bank, and other international financial organizations.

Prospective Borrowers

Prospective borrowers of the Loan include Chinese enterprises that are

● Registered with the regional Administration of Industry and Commerce and its local offices;

● Accredited with independent legal person status;

● Authorized to handle contract construction abroad; and

● Qualified with expertise, professionals and technology for such operations.

Qualifications for Loan Application

1. The borrower should demonstrate fine management and operations, have a sound financial position and a favorable credit standing, and should be capable of repaying the principal and interest incurred;

2. The borrower has already signed a contract for undertaking overseas construction projects, which, when necessary, should be accompanied with authorization and approval by competent government authorities;

3. The spin-off exports of Chinese equipment, materials, technology, labor service, and management services that derive from overseas construction contracts should account for no less than 15% of the total value of a specific project contracted;

4. The value of the overseas construction contract should be no less than USD 1 million, with advance payment amounting to no less than 15% of the total contract value in principle. In the case of deferred repayment, a payment guarantee should be provided as acceptable to the Bank;

5. The overseas construction contract shall be expected to offer satisfactory economic returns;

6. The contractor should have license and capability to perform the deal sealed;

7. The host country should remain stable both politically and economically;

8. In the case where repayment is assessed highly risky, appropriate export credit insurance should be arranged as per the requirements of the Bank;

9. Repayment guarantee acceptable to the Bank should be provided; and

10. Other requirement that the Bank deems to be of necessity.

Documents and Materials required for Loan Application

Documents and materials required for applying to the Bank for the Loan include:

1. Loan application;

2. The contract for the construction project and authorization and or approval by competent government authorities, if required;

3. Purchase contract and other commercial contracts related to the construction project;

4. Analysis of economic returns and the cash flow statement of the construction project that the borrower has signed to undertake;

5. A letter of intent for covering export credit insurance if such shall be deemed necessary;

6. The borrower's license for undertaking construction projects overseas, profile statements of both the borrower and the guarantor, a copy of the business license of the borrower having passed the annual examination, audited financial statements of the past three years and audited financial statements of the recent period of the current year, and other documents that demonstrate the credit standings and the operations of both the borrower and the guarantor;

7. Letter of intent for repayment guarantee, or in case of mortgage or pledge, valid certificates of ownership of the property under mortgage or pledge and evaluation reports thereof; and

8. Other relevant documents demanded by the Bank.

Export Buyer's Credit

The Export Buyer's Credit refers to the medium and long-term credit offered by the Bank to creditworthy foreign borrowers to support the export of Chinese capital goods, services and overseas construction projects. With a competitive interest rate and a longer period of time, the Export Buyer's Credit can facilitate foreign importers to make prompt payment to Chinese exporters for the exported products and services. The operations generally follow the Arrangement on Guidelines for Officially Supported Export Credits as developed by OECD.

1.Products and Services Covered by the Credit

Export Buyer's Credit is mainly extended to finance the export of Chinese capital goods such as mechanic and electronic products and complete sets of equipment. It is also available for financing the export of Chinese-built ships, high- and new-tech products & services, and overseas construction projects contracted by Chinese companies.

2.Requirements for Application

● The Borrower

● The borrower should be a foreign importer, or the importer's bank, or Ministry of Finance of or other authorized government institutions of the importing country, and should be acknowledged by China Eximbank. The borrower should have reliable credit standing, and should be capable of repaying all the principals and paying the accrued interests and related fees and charges of the loan as prescribed in the agreed repayment schedule.

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● The Exporter

● The exporter should be an independent legal entity with the acceptable qualification of dealing export operations or overseas projects as verified by authorized Chinese government authorities, and should be capable of implementing the commercial contract. The goods and services exported should fall within the support list of Export Buyer's Credit operated by China Eximbank.

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● Commercial Contract

● The commercial contract that seeks for export buyer's credit should be examined and approved by the Bank, and should satisfy the following requirements:

● The value of the commercial contract should be more than USD 2 million.

● The portion of the Chinese content of exported goods should be no less than 50% of the total value.

● The cash payment (down payment) made by the importer to the Chinese exporter should not be less than 15% of the total contract value or 20% in the case of ship export contract.

● The requirement of the Chinese content portion and the down payment percentage on overseas construction projects should be consistent with relevant policies and guidelines set by the Chinese government.

● Subject to the credit policy of the Bank, the borrower is required to provide a repayment guarantee, and when necessary, a sovereign guarantee of the importing country should be provided.

● Whether it is necessary to apply for export credit insurance should be decided by the Bank in accordance with the country risk of the borrower.

● 3.Credit Terms and Condition

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● Loan Currency

● The currency of the loan could be either US Dollar or other currencies acceptable to China Eximbank.

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● Loan Amount

● Generally, the Export Buyer's Credit provided by the Bank for an export project of goods or services shall not exceed 85% of the total contract value, and 80% in the case of a ship export contract. As for an overseas contracting project, the loan amount should follow the regulations of state relevant policies.

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● Maturity Period

● The maximum maturity period is 15 years from the date of the first disbursement of the loan to the last repayment date as stipulated in the loan agreement.

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● Interest Rate

● The interest rate could be either a fixed interest rate on the basis of the Commercial Interest Reference Rate (CIRR) as monthly announced by OECD, or a floating interest rate on the basis of London Interbank offered Rate (LIBOR) plus a certain interest rate spread. For special cases, the interest rate could be negotiated and decided between the lender and the borrower.

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● Drawdown of the Loan

● The availability of drawdown under the loan agreement shall be consistent with the terms and conditions of the commercial contract related.

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● Fees & Charges

● The borrower shall pay management fees, commitment fees and exposure fees to China Eximbank.

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● Loan Application and Approval

● An eligible borrower should submit a formal application to China Eximbank for Export Buyer's Credit together with the following documents and materials:

● Draft commercial contract or letter of intention, Tendering and bidding documents, feasibility study report on the project and relevant approval documents;

● Documentation that proves the credit standing of the borrower, the guarantor, the importer and the exporter; the financial statements of the borrower and the guarantor;

● Other documents and materials required by the Bank.

● China Eximbank will examine the application documents submitted by the borrower, confirm the qualification of the borrower and the guarantor, decide credit terms and conditions, and start project appraisal and approval process. Upon approval of the loan, China Eximbank will sign with the borrower a loan agreement on Export Buyer's Credit, and the guarantor will present to the Bank a Repayment Letter of Guarantee.

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● Loan Disbursement and Repayment

● China Eximbank shall disburse the loan to the borrower as prescribed in the loan agreement.

● The borrower shall repay to the Bank the principal and pay the interests together with relevant fees of the loan as stipulated in the loan agreement. Unless otherwise specified, once the drawdown period is over, the principal of the loan should be repaid semi-annually in equal installments. The interests incurred should be either paid semi-annually as calculated on the basis of the loan outstanding or follow the terms stipulated in the loan agreement.

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● Working Procedures

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● 1. A commercial contract is signed between the exporter and the importer. The value of the contract should be no less than USD 2 million.2. A loan agreement is signed between China Eximbank and the borrower. The loan amount should not exceed 85% of the commercial contract value while 80% in the case of a ship export project.3. Repayment guarantee provided by the guarantor to China Eximbank may be required according to the project case by case.4. Whether to require export credit insurance or not shall be determined by China Eximbank according to the country risk of the importing country.5. The down payment should not be lower than 15% of the commercial contract value and no less than 20% for a ship export project.6. The exporter delivers goods to the importer as stipulated in the commercial contract.7. China Eximbank disburses the loan after the delivery of the goods.8. The borrower shall semi-annually repay to China Eximbank the principal, the interests and all the fees and charges of the loan in accordance with the provisions of the loan agreement.

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