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CDB Issues 1.2 Trillion Yuan in Loans to Support Construction of Water Conservancy Projects and Help Build Sound Safety Barriers for Flood Control through Development Finance

Time:2021-10-21  Source:CDB

Hit by continuous heavy rainfall, the Sanhekou Water Control Project for Hanjiang-to-Weihe River Diversion, located at the junction between Foping County and Ningshan County, Shaanxi Province, recently had the most severe flood since the completion of the water control project, with the maximum water inflow reaching 2,840 cubic meters per second. At the critical moment, the Project lowered the discharge flood to below 1,300 cubic meters per second by playing its role of water storage and flood control, thus effectively reducing the flood control pressure on the downstream of Ziwu River and the main stream of Hanjiang River. Since 2017, CDB has funded the construction of Phase-I and Phase-II projects of Hanjiang-to-Weihe River Diversion, and it has offered loan commitment of 20.5 billion yuan and issued loans of 5.16 billion yuan to assist this major water conservancy project to give full play to its important roles in flood control, water supply, and water ecological restoration, benefiting more than 14 million people living in the areas along the Weihe River.

CDB has long been committed to strongly supporting construction of water conservancy projects. Since its establishment in 1994, CDB has resolutely implemented the arrangements of CPC Central Committee to proactively participate in construction of water conservancy projects in China. In 1994, CDB provided 30 billion yuan in loans for the Three Gorges Project, guaranteeing the funds required for the Phase-I construction of the project and laying a solid foundation for the Three Gorges Corporation to open up more financing channels, improve debt structure, and build up sustainable development capacity. Since then, CDB has offered financial and intellectual support for the construction of several major water conservancy projects, including the South-to-North Water Diversion Project, the Yellow River Xiaolangdi Project, and the Wanjiazhai Water Control Project. In recent years, CDB has further deepened bank-government cooperation. In 2011, 2015 and 2019, CDB and the Ministry of Water Resources signed the Cooperation Agreement on the Support of Development Finance for Water Conservancy Development, the Memorandum on Strategic Cooperation on Jointly Promoting the Construction of Major Water Conservancy Projects for Water Conservation and Water Supply, and the Memorandum on Cooperation of the Support of Development Finance for Eliminating Weak Links in Water Conservancy Infrastructure. With documents jointly issued by the two sides, CDB has thoroughly implemented the decisions and arrangements of the CPC Central Committee and the State Council to give play to the role of development finance by increasing medium- and long-term loan support, innovating investment and financing models, and providing differentiated credit policy support for boosting the development of key water conservancy fields such as flood control, water supply, rural water conservancy, and water ecological protection and restoration. As of September 2021, CDB has issued a total of 1.2372 trillion yuan in loans for construction of water conservancy projects, including 83 billion yuan issued in 2021 and a loan balance of 532.6 billion yuan. For the 128 major water conservancy projects in China that have started construction and have financing needs, CDB has financed 82 projects, committed loans of 431.9 billion yuan, and issued funds of 19.48 billion yuan.

CDB is dedicated to providing a solid financial guarantee for building major water conservancy projects in China. These projects play an irreplaceable and fundamental role in ensuring national water security. Their large investment amounts and long investment cycles are highly in line with the features of medium- and long-term investment and financing of development finance. In recent years, CDB has concentrated on supporting the construction of a good many water conservancy projects, including the Dateng Gorge Project in Guangxi Zhuang Autonomous Region, the Altash Project in Xinjiang Uygur Autonomous Region, and the Xiajiang Project in Jiangxi Province. The Dateng Gorge Project, for example, is a flood control project on the main stream of the Xijiang River. Its construction commenced in 2014 and is scheduled to be completed by 2023. After completion, it will play an important role in flood control of the Pearl River Basin, water resource allocation, improving the shipping capacity of the Xijiang River, and ensuring the water supply security of Macao and the Pearl River Delta. CDB has provided 17.4 billion yuan of long-term loans for the project, assisting Guangxi to realize the "dream of Dateng Gorge" for 150 years. In addition, CDB has funded dyke reinforcement, river management and reinforcement of dangerous reservoirs to facilitate flood control and disaster relief.

CDB helps improve the allocation of water resources to enable “distant water” to quench “present thirst”. Limited water resources and uneven distribution of water resources in time and space are the basic situations of water in China. The construction of water source projects and water diversion projects can better guarantee the water demand of residents and enterprises. Focusing on offering services to improve people's livelihood, CDB has supported the construction of key water sources in Yunnan Province, Guizhou Province and other regions, as well as the construction of major water diversion projects, including South-to-North Water Diversion, Yangtze River to Huaihe River Diversion, Central Yunnan Water Diversion, and Hanjiang River to Weihe River Diversion. Fuquan City of Guizhou Province, known as the "phosphorus capital of Asia“, is one of the important phosphorus chemical production bases in China, and its neighbor Weng’an County is also one of the key phosphorus ore bases in Guizhou Province. However, the two places are confronted with the problem of insufficient regulation and storage capacity of local water storage projects, which causes the water for urban use to occupy the water that should have been utilized for agricultural irrigation and natural environment. In order to resolve this problem, CDB financed the construction of Guizhou Fengshan Reservoir boasting a total storage capacity of 104 million cubic meters and an average annual water supply of 73.1 million cubic meters. In the near future, the imbalance in supply and demand of water for economic and social development in Fuquan City and Weng’an County will be significantly alleviated. Central Yunnan is the heartland of economic and social development in Yunnan Province and one of the three arid areas in the Yangtze River Basin. CDB raised 24 billion yuan to support the construction of the Central Yunnan Water Diversion Project, one of the 172 major water conservancy projects in China, helping resolve the problem of water shortage in Central Yunnan. The designed annual average water diversion volume of this project stands at 3.4 billion cubic meters (water volume at the start of the canal). It is expected that the project will directly benefit over 11 million people, improve the conditions of an irrigation area of 636,000 mu (424 million m2), and supply 672 million cubic meters of water to Dianchi Lake, Qilu Lake and Yilong Lake, greatly improving local ecological environments.

CDB supports the construction of rural water conservancy facilities to allow more people to share the fruits of development. Rural water conservancy facilities function as important infrastructure to enhance the capability to resist drought and flood, improve rural production and living conditions, and enhance comprehensive agricultural production capacities. They are vital to consolidating and expanding the achievements in poverty alleviation and promoting rural revitalization. With a strong sense of social responsibility, CDB wholeheartedly supports the construction of rural drinking water safety projects and water-saving irrigation projects across China. In recent years, Jiangxi Province has boosted the construction of urban-rural integrated water supply projects in two phases. During Phase I, 277 water works in 41 cities (districts and counties) have been modified, expanded or newly built, benefiting 15.3 million people. During Phase II, 205 water works in 17 cities (districts and counties) have been modified, expanded or newly built, benefiting 10.67 million people. CDB provided 9 billion yuan and 7 billion yuan in loans for Phase-I and Phase-II projects, respectively, making a positive contribution to increasing the penetration rate of tap water in rural areas of Jiangxi Province, tackling the problem of drinking water safety in rural areas, and bolstering the revitalization of old revolutionary base areas. Moreover, CDB granted 18 billion yuan in loans to support the construction of urban-rural integrated water supply projects in Fujian Province by building water intake pump stations, raw water transmission facilities, water purification plants, and water distribution networks in 31 counties (cities and districts) of the seven prefectures of the province for local people to have access to clean water.

CDB facilitates restoration and treatment of water ecological environment to bring back the beautiful scenery via loans. Clear waters and green mountains are as good as mountains of gold and silver. A good ecological environment is valuable in both natural and economic terms, and it is closely related to the potential and momentum of economic and social development. CDB supports the construction of comprehensive treatment and ecological restoration projects in river and lake basins. It effectively meets the demands of funds for building a large number of key projects for water environment protection and comprehensive treatment in the Taihu Lake, the Chaohu Lake, the Dianchi Lake, the Yongding River, the Xin’an River, the Yitong River water system, etc. As the ecological water replenishment project of Yongding River was successfully connected to the entry of the New Yongding River into the sea in September 2021, water can now flow through the 865-kilometer-longYongding River originating in the mountains to the sea. For a long time, due to the over-exploitation of water resources and the lack of natural water, Yongding River has been cut off and its ecosystem has been seriously degraded. In recent years, with the concerted efforts of the National Development and Reform Commission, the Ministry of Water Resources, the National Forestry and Grassland Administration, as well as relevant provinces and cities, the comprehensive treatment and ecological restoration project of the Yongding River Basin has been smoothly promoted. As a result, Yongding River has gradually become a “flowing, green, clean and safe river”. As the only financial institution in the Ministerial-Provincial Coordination Leading Group for Comprehensive Treatment and Ecological Restoration of the Yongding River Basin, CDB has innovated financing models to handle the financing difficulties caused by no or low income from relevant ecological restoration and treatment projects, offered financing support for the construction of projects for water replenishment, river course treatment and water-saving irrigation of Yongding River, as well as helped build a high-quality water conservation area, ecological protective barrier and ecological corridor in the Beijing-Tianjin-Hebei region.

According to a person from CDB, during the 14th Five-Year Plan period, CDB will fully implement the decisions and arrangements of the CPC Central Committee and the State Council to give full play to the role of development finance by focusing on the areas of water security of flood control, water supply and water ecological restoration. CDB will also support projects for treatment of large rivers, key water sources, water resource allocation, urban and rural water supply safety, comprehensive treatment of river basins, water-saving irrigation, danger removal and reinforcement of dangerous reservoirs and intelligent water conservancy, in a bid to contribute to the high-quality development of water conservancy in China with excellent financial services.