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China buys IFC bonds, backs trade finance

By Xin Zhiming (China Daily)
Updated: 2009-04-02 07:45

China will support the financing of global trade by buying private bonds of the International Finance Corporation (IFC), according to the central bank.

Through buying bonds from the IFC, an arm of the World Bank Group, China aims to support the corporation's new trade finance program, which will provide liquidity support to financial institutions engaged in trade finance by providing them additional credit, said a statement on the website of the People's Bank of China.

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The funding will be used to support economic development and poverty alleviation in Latin America and the Caribbean, and promote trade finance in the regions.

The global trade finance gap is expected to widen from $25 billion in November last year to $100 billion by the end of this year thanks to the worsening global financial crisis, according to an estimate by the World Trade Organization.

China has provided liquidity to the trade finance programs of a number of regional multilateral development institutions.

President Hu Jintao pledged at the G20 summit in Washington in November that "China is willing to actively participate in the trade financing plan of the IFC".

Since it became a formal member of the Inter-American Development Bank (IDB) Group in January, China has contributed $200 million, $75 million and $75 million to the IDB, the Inter-American Investment Corporation and the Multilateral Investment Fund under the group, respectively.

China has also provided liquidity to finance trade in other regions through membership in such institutions as the African Development Bank, the Asian Development Bank, the Caribbean Development Bank, the Development Bank for Eastern and Southern Africa Trade and the West African Development Bank.