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China to exercise more control over government banks

Chinese government is strengthening its control over the country’s three major policy banks to position them better to support new initiatives to finance projects and corporate expansions abroad and to help stabilize growth at home. The country’s cabinet, the State Council, released approvals for reform plans at China Development Bank, Export-Import Bank of China and Agricultural Development Bank of China. The plans seek to reverse an increasingly commercialized strategy pursued by at least two of these banks and reinforce their role as a financing tool of the Chinese government, according to government advisers and analysts. The State Council stressed the banks’ roles in supporting government policies and strategic goals. The plans also call for the banks to improve their risk management and internal controls.Topping the agenda for China’s leadership are ambitious plans to finance roads, railways, ports, telecommunications networks and other infrastructure to better connect the Chinese economy with the rest of Asia, Africa, the Middle East and Europe. As part of the effort, China has established a $40 billion Silk Road fund and spearheaded the setting up of a new development bank, the Asian Infrastructure Investment Bank, which has attracted interest from more than 40 countries including staunch U.S. allies and which is expected to begin operations with $100 billion in capital.

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