The Research On Chinese Short-term Financing And Risks Of Foreign Trade

The faster foreign trade has developed, the more short-term trade financing is needed urgently in our country. According to Mckinsey, by 2010 the total amount of foreign trade of China will have been 1.5 billion dollars, and that of trade financing will be ranging from 5 to 10 billion. Faced to so large an increasing market, banks, enterprises and the government in China are striving to perfect themselves to make short-term trade financing develop successfully and prompt the development of foreign trade. However, as for banks, there are still many problems in the development of short-term trade financing.The thesis aims to solve these problems, starting form introducing some basic concepts and theories. It introduces foreign trade financing and short-term trade financing, then analyzes the characteristics of short-term trade financing and shows the relationship between short-term trade financing and foreign trade. After that, it studies the modes of short-term trade financing related to practice to make readers understand short-term trade financing deeply. Finally, it reveals the risks of banks in developing short-term foreign trade financing using some cases. By analyzing the causes of risks thoroughly, it puts forward some effective solutions to different modes of financing.The thesis consists of three chapters.The first chapter summarizes short-term trade financing. It introduces the meaning of short-term trade financing in China and illustrates the importance of it in developing foreign trade. The basic modes of short-term trade financing are systematically studied form aspects of import and export. Then the kinds of practices of international trade financing are expounded specifically. Outward trade financing deals with packing loan, outward letter of credit documentary bills, outward collection documentary bills, export discounting and etc.. Import trade financing refers to limits for issuing letter of credit, trust receipt, import bill advance, delivery against Bank Guarantee, inward bill purchased under collection and etc.. Combined with international settlements and international practices, this chapter analyzes the legal meanings and characteristics of these short-term trade financing means and expounds the functions of modes of short-term financing.The second chapter deals with the control of short-term financing risks. It explains the risks of our commercial banks in developing short-term trade financing and the characteristics of these risks by means of the current condition and real cases. Then it analyzes comprehensively client credit risk, trade risk, financial fraud risk, country risk and political risk and etc, which banks will encounter in developing international trade financing business. Later, it studies risk causes of international trade finance business and risk management, and demonstrates the practical experience of risk control of foreign banks.The third chapter puts forward the measures of risk management of short-term trade financing, which is the core of the thesis. It suggests corresponding prevention measures of different financing modes, and discusses how to prevent risks in international trade financing from the perspective of banking.In the end, the thesis gives some suggestions on whether banks must carry out trade financing credit line granting system and management measures strictly, which will be helpful to both decision-makers of banking and economists. This thesis studies short-term trade financing theoretically and practically from the perspectives of trade settlement, management and law and regulations, analyzes short-term trade financing business in China, and compares the characteristics of modes of short-term trade financing. On the base of our commercial banks, it reveals their problems in developing short-term trade financing and puts forward some suggestions useful to both theory and practice.