Foreign Government Loan refers to either the concessional loan or the mixed credit provided by a foreign government to Chinese government. The mixed credit refers to the combination of a concessional loan provided by a foreign government with an export credit or a commercial loan provided by a foreign bank.

Type of the Projects

The onlending projects could be divided into the following three types according to the differences in the borrower, the guarantor, and the repayment obligations:

Type One: The borrower is a relevant department of the State Council or a local provincial department of finance, where repayment guarantee can be exempted.

Type Two: The borrower is a Chinese enterprise that implements the onlending project, and the relevant department of the State Council or the local provincial department of finance provides repayment guarantee.

Type Three: The borrower is a Chinese enterprise that implements the onlending project and itself bears the responsibility of repayment. No repayment guarantee is provided by any relevant department of the State Council or local provincial department of finance.

Procedures

1. Chinese Ministry of Finance, the government window facing outward for the bilateral cooperation, is responsible for signing the loan agreement with the lending government. Development reform authorities at different regional levels are responsible for accepting and dealing with the project and examining and ratifying the feasibility study report of the project.

2. Provincial departments of finance and development reform should submit project documents and materials to their respective superintendent authorities. Chinese Ministry of Finance designates, upon the choice of the borrower, the onlending bank to assess and approve the project and then to onlend the Loan to the end-user.

Lending Countries

Since it took charge of the onlending business on April 1, 1995, China Eximbank has, by the end of 2004, onlent loans provided by 18 foreign governments and two international financial institutions, including: Austria, Australia, Belgium, Canada, Denmark, Finland, Germany, Japan, Korea, Kuwaiti, Luxembourg, the Netherlands, Norway, Poland, Spain, Sweden, United Kingdom, Saudi Arabia, and Nordic Investment and Nordic Development Fund.

Terms and Conditions of the Loan

The terms and conditions of the Loan are comparatively preferential with its long maturity and low interest rate. Loans from different governments are different with each other in their terms and conditions. For example, for Japanese Government Loan, the onlending maturity is generally between 30 to 40 years with interest rate ranging between 0.75% and 2.2%, while for German Government Loan, the maturity is generally 15-20 years with interest rate ranging between 0.75% and 3.25%.

Policy on Onlending Business

1. To carry out the state industrial policy and other relevant policies of utilizing foreign funds

2. To support mainly the infrastructure construction in such key sectors of the national economy as transportation, telecommunication, electricity generation, agriculture, and environment protection

3. To actively observe the national strategy of "developing the west" and focus on lending support for economic buildup to the comparatively backward places in the central and western regions of China and the old industrial base in Northeast China.

4. To make full use of the long maturity and low interest and other preferential terms of the Loan to support Chinese enterprises in their import of advanced equipment and technology from foreign countries and to promote the restructuring of the national economy by