Impacts Of China's Entry Into WTO On China Development Bank And CDB's Solutions

Impacts of China's Entry into WTOon China Development Bank and CDB's SolutionsI The advantages of CDB are as follows:1. Being the largest state-owned policy bank, CDB has established its image among investors as a quasi-sovereign rating financial institution on the basis of sovereign credit. 2. The Special Decree 22 of State Council has rendered CDB some important privileges including:* CDB is the only financial institution granted ministerial status other than the central bank and enjoys strong support from the government.* Ministry of Finance appropriated RMB 50 billion to CDB as the initial operational capital and promises to inject capital in CDB on an as-needed basis in line with the expansion of CDB's assets.* CDB is exempted from bankruptcy in accordance with Enterprises Bankruptcy Act of P.R.C.3. CDB has maintained good relationship with government bodies and enjoys vigorous support from relevant government agencies and local governments in terms of project exploration and loan management. In comparison with foreign banks, CDB has a broader sub-branch network and does not face country risk.4. With the expansion of the needs for infrastructure and the development of big west exploration plan, CDB is surely favored unprecedented opportunities.5. CDB is the pioneer among the 3 policy banks in terms of internal structural reform and has outlined clearly its goal of strengthening operation and management and mitigating financial risks within the Bank's framework and on the basis of market economy mechanism. CDB has established a good reformer's and innovative image in front of both domestic and overseas investors.II. Problems remained in and disadvantages of CDB1. The problem of positioning.2. The decrease of CDB's capital adequacy ratio, even though the ratio is higher that any commercial banks. 3. The Division of Asset-Liability Management is on early stage and its operation still could not meet the international standards.4. The volume of potential NPL is still big. Even though CDB has achieved remarkable progress in terms of NPL's disposal, a matured system has not been in place yet to prevent the existence of new NPLs. 5. Credit businesses and risk management fail to follow the development trend of market economy.6. Although major progress realized in market-oriented funding, there are still tough jobs like how to improve the mechanism of market-oriented funding according to the development of capital market in order to cut funding cost and the efficiency of the practice.7. Financial information system should be further improved.8. Internal management should be further strengthened.9. Intermediate businesses are little in volume and in need of full exploration.10. The capacity in financial innovationbusinesses is relatively week.11. The utilization of IT in management should be strengthened.12. The organization structure should be further adjusted to fit to the requirement of market economy; staff members are in need of professional training to up-date professional knowledge and improve professional quality.III. China's accession to WTO will affect and challenge CDB's businesses as follows:1. The impact on the position and orientation of CDB; the impact on relationship between government and CDB.2. The impact on Capital Adequacy Ratio. 3. The impact on asset-liability sheet management.4. The impact on non-performing loans and the quality of assets.5. The impact on risk management.6. The impact on funding mechanism. 7. The impact on financial information system.8. The impact on internal management.9. The impact on intermediate businesses.10. The impact on financial innovation.11. The impact on IT utilization.12. The impact on organization structure and the motivation of staff members. IV. To better confront the challenge brought by WTO accession, I advise countermeasures as follows:1. To streamline the internal and external relationship, and clarify the mark...