The International Finance Corporation (IFC) has announced that China Construction Bank Corporation (CCBC) has become the first bank in China to join its letter of credit (L/C)-oriented Global Trade Finance Programme (GTFP).

China is one of the IFC's strategic priorities as it seeks to boost trade finance across emerging markets.

Benefits

The private sector arm of the World Bank Group says it expects the programme will benefit primarily mid-sized private Chinese exporters.

Specifically, the IFC says it will help these companies export to some of the more difficult markets, allow them to offer competitive export financing terms and provide them with a guarantee of payment.

Global trade expansion

Deputy general manager of CCBC, Jiang Jianhua, says that the programme, "will enable us to expand our global network of trade partners within its growing set of participating countries and banks".

East Asia regional manager for IFC, William Haworth, says, "promoting trade finance and especially South-South trade finance across emerging markets is one of IFC's strategic priorities in China."

"We believe Chinese banks' participation in the GTFP will facilitate trade among developing countries," he adds.

Cover available

The GTFP offers confirming banks partial or full guarantees to cover payment risk on banks in emerging markets.

The guarantees are transaction-specific and apply to transactions involving L/Cs, trade-related promissory notes and bills of exchange, bid and performance bonds and advance payment guarantees or credits to suppliers.

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.