Commercial lender applauds country's opening-up moves in financial sector

China's economy has built strong resilience and will sustain long-term growth. With COVID-19 being brought under control and the economy recovering gradually in major cities, the country will see a noticeable GDP rebound in the latter part of this year, said Ginger Cheng, acting chief executive officer of DBS Bank (China) Ltd.

"If the pandemic remains controllable and life and work in major cities return to normal, China will see a fairly large economic rebound in the second half," Cheng said in a recent online interview.

"If the government can control the unemployment rate and stabilize the employment of fresh graduates, the efforts will be conducive to consumption recovery. In addition, China has launched policies promoting reforms in the housing sector. Banks will choose some quality real estate developers to give them support. If the real estate sector stabilizes and home sales pick up, a fairly strong growth trend is likely to be seen in the second half."

She said that this year may be the most difficult year for China as the country faces tremendous challenges, but its economic growth may return to a slightly higher level over the next two years.

DBS has been participating deeply in the opening-up of China's financial market. DBS Securities (China) Ltd, a majority-owned securities joint venture in the country of DBS Group, officially commenced business operations on June 7, 2021. DBS Bank Ltd, a wholly owned subsidiary of the group, acquired a 13 percent stake in Shenzhen Rural Commercial Bank Corp Ltd last year and became its largest shareholder.

"Our parent bank has been yearning to set up a majority-owned securities company in China for a long time. The establishment of DBS Securities (China) Ltd is an exact result of the opening-up of the country's financial market," Cheng said.

The China Banking and Insurance Regulatory Commission has announced 34 new measures since 2018 to promote further opening-up of the nation's banking and insurance sectors. The regulator approved the establishment of more than 120 foreign-invested banks and insurance companies between 2018 and 2021, said Liang Tao, vice-chairman of the CBIRC, at the Boao Forum for Asia Annual Conference 2022 on April 21.

In addition, a group of international institutions taking a leading position in the area of wealth management, commercial insurance or credit ratings entered the China market via a wholly foreign-owned enterprise or a foreign-invested enterprise in which the foreign company has a controlling share or equity participation, Liang said.

The business environment of the country has improved compared with 20 years ago, with intensified policy strength to promote the opening-up of its banking sector, Cheng said.

"China has a vast market that is still developing and expanding. As Chinese people's livelihoods keep improving and their incomes are on the rise, foreign companies cannot ignore the China market, which is huge and has promising prospects. Although some multinational companies open plants in Southeast Asian nations like Vietnam, they are not leaving China but making a move for deployment to ensure supply chain stabilization. Their main market remains in China," she said.

As China aims to peak carbon dioxide emissions by 2030 and achieve carbon neutrality by 2060, DBS put its focus on promoting the low-carbon transition of polluting industries. Companies in these industries have tremendous financing needs because they will make huge investments in green transformation, she said. Apart from green finance, the bank is also looking forward to providing sustainability consulting services to its clients.

On Jan 31, DBS Bank Ltd, acting as the joint green structure advisor and joint global coordinator, helped Henan Railway Construction & Investment Group Co Ltd (Henan RCIC) price three-year $400 million senior unsecured green bonds, with a final yield rate at 2.2 percent.

DBS also assisted Henan RCIC in obtaining an A2(stable) rating from Moody's and helped the company build its green financing framework.

Last year, DBS China signed an agreement with Huaneng Tiancheng Financial Leasing Co Ltd and provided supply chain financing worth 500 million yuan ($74.53 million). The money will be used to help the company offer financial leasing services for renewable energy projects to support the development of China's clean energy industry.