How it started
History
The China Development Bank (CDB) was established in 1994 to provide development-oriented financing for high-priority government projects, particularly major infrastructure and projects that raise quality of life. It is under the direct jurisdiction of the State Council and the People's Central Government. At present, it has 35 branches across the country and one representative office.
The main objective as a state financial institution is to support the macroeconomic policies of the central government and to support national economic development and strategic structural changes in the economy. The bank provides financing for national projects such as infrastructure development, basic industries, energy, and transportation. Most of CDB's loans are for domestic projects, and it began lending for projects abroad in the early 2000s.
From 1994 to 1998, CDB's fundraising was subject to a higher degree of state control than in later periods. In the 1990s, CDB facilitated the creation of China's interbank bond market. Initially, the People's Bank of China (PBOC) required domestic financial institutions such as commercial banks to buy policy bank bonds. At this stage, the PBOC usually set high yields and did not permit the apportioned bonds to be sold on the secondary market. In February 1996, CDB began its first overseas bond issuance in Japan, followed a year later by an issuance in the United States. Overseas issuance helped CDB diversify its funding sources. Ultimately, the issuance of bonds allowed CDB to become a financially independent bank without the state's tax revenues.
In April 1998, former PBOC deputy governor Chen Yuan, the eldest son of Chen Yun, was appointed CDB's governor. Chen implemented reforms designed to increase CDB's autonomy by reducing state involvement in CDB's fundraising and lending.
From 1998 to 2008, CDB increased its fundraising autonomy and used an auction-based bond issuance mechanism to raise its funds. In 1999, CDB offered China's first floating rate bond.
From Wikipedia’s article on China Development Bank, shared under CC BY-SA 4.0.2