As equity instruments, policy-based developmental financial instruments are expected to become normalized macroeconomic control tools, among which transportation, municipal, industrial parks, and water conservancy projects are the key areas of policy-based developmental financial instruments.
First, the mode of operation
Since late July 2022, CDB, ADBC and Export-Import Bank have respectively set up CDB Infrastructure***Agricultural Development Infrastructure*** and CIBC Infrastructure*** for the issuance of policy-based financial instruments. There are three main ways to use new financial instruments: divided into:Equity investment, shareholder loans, special bonds, capital bridging loans, etc。Judging from the current public project information, the project to:Shareholder borrowingThe form is more common, followed by equity investment, and there are fewer cases involving special debt capital bridging borrowing. Shareholder borrowing
Shareholder borrowing refers to:**Entrust a policy development bank to provide funds to the shareholders of the target company in the form of loans, and the loan funds will be invested in the designated projects as project capital。In the shareholder borrowing model, the infrastructure investment company, the policy bank, and the shareholders of the project company sign a shareholder loan contract, and the company entrusts the bank to issue loans to the project company, and the shareholders of the project company then increase the capital of the project with the loan funds. From the perspective of the exit mechanism, shareholders should withdraw from the loan in installments in principle according to the actual situation of the borrower and the project. The borrower shall repay the loan in installments in accordance with the agreement. Equity investment
Equity investment model refers to:The infrastructure ** company directly invests in the implementation of the project, but does not participate in the specific operation。In July 2022, the Henan Provincial Development and Reform Commission announced that CDB's infrastructure **3400 million yuan of funds have recently been invested in Anyang Airport Company, mainly used for the construction of Anyang Henan Northeast Airport, which is the first batch of equity investment infrastructure successfully invested in the country. On September 21, 2022, Anyang Transportation Airport Development and Investment Co., Ltd. absorbed CDB Infrastructure*** as a new shareholder and increased the registered capital of the company from 6$7.1 billion increased to 101.1 billion yuan, with an additional registered capital of 3400 million. After the change of equity, the shareholding of Henan Aviation Investment Aviation Basic Industry Development has decreased from 51% to 34%, the shareholding ratio of Anyang Investment Group has decreased from 49% to 33%, and the shareholding of China Development Bank Infrastructure has decreased to 34%. According to the data disclosure of Enterprise Early Warning, CDB Infrastructure has invested in 62 companies, of which 60 companies have announced their investment ratios, with a total investment of 146$3.4 billion; Agricultural development infrastructure has invested in 109 companies, of which 104 companies have announced their investment ratios, with a total investment of 135362772 billion yuan; CIB Infrastructure*** has not publicly disclosed that it has made an external equity investment. In terms of the exit mechanism, in principle, equity investment should be based on the principle of marketization and the actual situation of the projectThe exit is achieved by holding the equity in installments or transferring it to the controlling shareholder or a powerful transferee in a lump sum。Equity investment projects should agree on the exit conditions, deadline and exit arrangements in advance, and give priority to participating in projects with shareholder repurchase arrangements. For projects with good profitability and growth, in addition to shareholder repurchase, equity transfer, public listing, asset management and other methods can also be adopted. Special bond capital bridging borrowing
Special debt capital bridging loansFor special bond projects, ie**First as the project capital investment, wait until the issuance of special bonds for capital replacement, the current public project information is less。From the perspective of the exit mechanism, the special bond capital bridging is in accordance with the special bond issuance arrangement, and the special bond will be repaid and withdrawn after the special bond capital is in place. It can be repaid in a lump sum or in annual instalments.
Second, the direction of capital investment
Policy-based development financial instruments focus on three types of projects: 1. ** The five key areas of infrastructure identified by the 11th meeting of the Financial and Economic Committee are:Transportation, water conservancy, energy and other network-based infrastructureInformation technology, logistics and other industries to upgrade infrastructureUnderground pipe gallery and other urban infrastructureHigh-standard farmland and other agricultural and rural infrastructureInfrastructureMajor scientific and technological innovationsand other fields. 3、Other projects that can be invested by local ** special bonds。In addition, the second batch also includes the renovation of old residential areas, provincial highways, manufacturing enterprises and vocational colleges and other equipment renovation and other directions. In terms of actual investment, we analyze the investment direction of the three major policy banks and the investment direction of the landing project. The three major policy banks are invested in funds
Judging from the investment situation of the three major policy banks, according to their different positioning, their investment areas have their own focus. 1. China Development Bank - CDB Infrastructure Investment**CDB invests more in traditional infrastructure projects, mainly in large economic provinces.
According to data from the official website of CDB, as of the end of September 2022, CDB has invested 360 billion yuan in infrastructure investment, supporting more than 800 projects, focusing on the five key infrastructure areas identified at the 11th meeting of the Finance and Economics Committee, major scientific and technological innovation, vocational education and other fields, and other projects that can be invested by local special bonds. 2. Agricultural Development Bank of China - Agricultural Development Infrastructure**The Agricultural Development Bank focuses on supporting municipal and industrial park infrastructure, transportation infrastructure, and agricultural and rural infrastructure projects, and highlights the characteristics of "three rural". According to the official website of the Agricultural Development Bank, as of October 12, 2022, the agricultural development infrastructure has increased its capital twice and invested in three batches, with a total of 245.9 billion yuan of policy-based financial instrument funds to support 1,677 projects in the infrastructure field, involving a total investment of nearly 3 trillion yuan; At present, funds have been invested in 31 provinces across the country, and the top ones are 6 provinces, including Guangdong, Jiangsu, Shandong, Zhejiang, Henan and Sichuan, accounting for about 50% of the total investment quota. In terms of fields, there are 229 water conservancy projects with an amount of 37 billion yuan, 140 transportation infrastructure projects with an amount of 52.1 billion yuan, 888 municipal and industrial park infrastructure projects with an amount of 99.4 billion yuan, and 82 vocational education projects with an amount of 7.5 billion yuan. 3. Export-Import Bank of China - Infrastructure for Banking Imports**Compared with the China Development Bank and the Agricultural Development Bank, the Export-Import Bank of China's policy-based development financial instruments were issued relatively late, accounting for the smallest proportion of the overall investment. According to the official website of the Export-Import Bank of China, the Bank has invested a total of 50 billion yuan in infrastructure to support 106 major projects. In terms of sub-fields, 33.2 billion yuan was invested in transportation infrastructure such as ports, railways, and highways, accounting for 664%；6.2 billion yuan was invested in the field of energy and water conservancy infrastructure, accounting for 124%；5.3 billion yuan was invested in the field of integrated circuits, accounting for 106%；3.5 billion yuan was invested in industrial parks and major logistics infrastructure, accounting for 70%。In terms of regions, 25.2 billion yuan was invested in Guangdong, Jiangsu, Shandong, Zhejiang, Henan and Sichuan, accounting for 504%；33.7 billion yuan was invested in key provinces, autonomous regions and municipalities, including six major economic provinces, accounting for 674%。The funds of the landing project are invested
According to the public news and information of local** and regional branches of policy banks, from July 21, 2022 to April 2023, a total of 374 policy-based development financial instrument projects (see the annex at the end of the article for details, incomplete statistics) information, involving 30 provinces, municipalities and autonomous regions, the project types cover transportation, energy, water conservancy, municipal, industrial parks, cold chain logistics, affordable housing projects, vocational education, emergency facilities, etc. 1. From the perspective of the number of projects, transportation, municipal, industrial parks, and water conservancy projects are the focus of investmentAmong the 374 projects, 112 are transportation projects, accounting for 2995%, which is the main area of policy-based development financial instruments; 70 municipal projects, accounting for 1872%, 65 industrial park projects, accounting for 1738%, 46 water conservancy projects, accounting for 123%, a total of 293 projects in the above four categories, accounting for 7834%, and the rest of the cold chain logistics, affordable housing projects, vocational education, emergency facilities, new infrastructure and other projects 81, accounting for 2166%。According to the sample data, transportation, municipal, industrial parks, and water conservancy projects are the key areas of policy-based development financial instruments. 2. From the perspective of the amount of project investment, transportation and water conservancy projects are the top priorityOf the 374 projects, 290 projects announced their loan quotas, totaling 1,744100 million yuan, of which the loan amount for transportation projects is 1214295.3 billion yuan, accounting for 696%；Water conservancy project 2105.2 billion yuan, accounting for 121%；Industrial Park Project 109636.5 billion yuan, accounting for 63%；Energy Project 72242.9 billion yuan, accounting for 41%；Municipal Project 62717.5 billion yuan, accounting for 36%；The rest of the cold chain logistics, affordable housing projects, vocational education, emergency facilities, new infrastructure and other projects 74687.8 billion yuan, accounting for 43%。According to the sample data, according to the analysis of the project investment amount, the transportation project has the highest investment amount, and some projects have received loans of more than 10 billion. The second is water conservancy projects, in terms of quantity, water conservancy projects are not as many as municipal and industrial park projects, but their project investment quota is larger, so the investment quota is second only to transportation projects. the third is the industrial park project, which has a large number, but the project volume is small, and the amount of investment is relatively small; In addition, the quota for energy and municipal projects also accounts for a certain proportion. 3. From a regional point of view, major economic provinces are the focus of investmentExcept for the four provinces of Beijing, Gansu, Tibet and Guizhou, the work reports and official websites of the other provinces have announced the number and quota of policy-based developmental financial instruments in their provinces. From the perspective of the investment of project funds that have been implemented, the investment of policy-based development financial instruments involves 31 provinces, but the regional distribution is uneven. Large economic provinces are the focus of policy-based development financial instruments, followed by provinces with more project reserves.
3. Guidelines for project application
The application requirements and processes for policy-based developmental financial instrument projects vary from place to place, and according to the inquiry of public information channels, the processes of some places are mainly as follows:Filing requirements
1. Project planning requirementsThe project should meet the planning requirements and belong to the 102 major projects of the "14th Five-Year Plan", the key special plans and regional plans approved by the relevant departments, the local key plans, and the relevant implementation plans. 2. Requirements for the preliminary work of the projectThe newly started project should have sufficient preliminary work and mature conditions, and the feasibility study report must be approved, or the approval and filing procedures must be completed (with an official document number); Other land pre-examination (land certificate), construction land (sea) planning permission, construction project planning permission, environmental impact assessment approval, construction permit and other procedures have been completed or are being processed. 3. Requirements for the nature of the projectThe project should be a quasi-public welfare project or business project that can generate a certain amount of income and meet the standards, which must have strong social benefits and certain economic feasibility to ensure that the project can be repaid in the future and cannot form a hidden debt. 4. Project capital requirementsThe proportion of ** in the cumulative arrangement of the project to the project capital shall be controlled by 50%. The proportion of project capital is calculated in accordance with the provisions of the Notice on Strengthening the Management of Capital of Fixed Asset Investment Projects (Guo Fa [2019] No. 26). After deducting all kinds of ** financial funds, local ** special bonds and ** used for project capital, the proportion of capital contribution of local and project units shall not be less than 5% of the total investment of the project. After arranging all kinds of financial funds, local special bonds and special bonds for project capital, the proportion of project capital cannot be higher than the bank lending requirements of similar projects under normal circumstances. 5. Project scale requirementsThe project should be a single project, and priority should be given to large projects that are fully assembled. Some areas have clear scale requirements, such as: water supply and drainage projects need to invest more than 100 million yuan; The total investment of innovative infrastructure projects such as vocational education, affordable housing projects, and national common technology platforms needs to be more than 200 million yuan, the total investment of information infrastructure projects such as 5G, broadband, data centers, cloud computing, and artificial intelligence needs to be more than 400 million yuan, and the total investment of urban underground comprehensive pipe corridors and infrastructure projects in industrial parks at the provincial level and above needs to be more than 500 million yuan. 6. Prohibitions on the construction content of the projectThe project shall not include land acquisition and storage and real estate development, shall not be built in violation of regulations, shall not be "two high and one low" (i.e., high energy consumption, high emissions, low level) projects, and the funds applied for cannot be used to make up for the gap between local fiscal revenue and expenditure. In addition, the investment areas of policy-based development financial instruments include "other projects that can be invested by local ** special bonds", so the negative list of special bond investment is also applicable to policy-based development financial instruments, including: In the field of urban construction, except for water supply projects, other projects cannot be used as capital for the issuance of local ** special bonds. The supporting infrastructure projects of the industrial park need to fill in the approval documents and document number of the park where the project is located, and the projects that are not municipal, provincial and above parks are invalid, and do not support the construction of pure factories or factories, pure roads or road network construction projects. The affordable housing project only supports the renovation of old urban communities, and does not support shantytown renovation and rental housing projects, and the renovation of old communities is not allowed to include the demolition of new residential buildings. Declaration process
1. Local ** screening reserve projectsThe provincial government will take the lead in screening reserve projects, and each sub-field shall be reviewed and implemented by the provincial professional department in conjunction with the competent department, and specific work requirements shall be put forward, and the eligible projects shall be declared through the national major construction project library according to the formal submission procedures. For the applicant, before the project declaration, it is necessary to communicate with the relevant local policy banks in advance, and the project must be clearly invested by one of the three banks**. In the process of declaration, it is necessary to truthfully fill in the basic information of the project, capital requirements and gaps, project yields and preliminary work. 2. The national *** review project and push itAfter the project is pushed to the state, the state*** organization reviews the project, feeds back the eligible projects to the People's Bank of China, and the People's Bank of China pushes it to the three policy banks, and the banks independently review and lend money. 3. The policy bank shall review and issue the loanThe policy bank shall review the push projects, select the projects in accordance with the market-oriented principle and choose the investment independently, and issue loans to the eligible projects as soon as possible, and the project units shall cooperate with the bank to do a good job in loan application and lending.
Fourth, the key content of the summary
There are three main ways to use new financial instruments: It is divided into equity investment, shareholder borrowing, special bond capital bridging borrowing, etc. Judging from the project information disclosed so far, projects are more common in the form of shareholder loans, followed by equity investment, and there are fewer cases involving special bond capital bridging loans. 2. From the perspective of the investment of the three major policy banksThe investment quota is tilted towards the large economic provinces, which is a common feature of the three。In terms of investment sectors, CDB has invested more in traditional infrastructure projects; The Agricultural Development Bank focuses on supporting municipal and industrial park infrastructure, transportation infrastructure, and agricultural and rural infrastructure projects, and highlights the characteristics of "three rural". The issuance time of the export bank is relatively late, and the overall investment volume accounts for the smallest proportion, mainly in the fields of transportation, energy, water conservancy, integrated circuits, industrial parks and major logistics infrastructure. 3. Analyze from the perspective of the number of projectsTransportation, municipal, industrial parks, and water conservancy projects are the key areas of policy-based development financial instruments。Further from the perspective of the amount of project investment, transportation and water conservancy projects are the top priority. 4. From the perspective of the investment of project funds that have been landed, the investment of policy-based developmental financial instruments involves 31 provinces, but the regional distribution is not balanced. 5、There are six aspects of project application requirements, including: project planning requirements, project preliminary work requirements, project nature requirements, project capital requirements, project scale requirements, and prohibited matters for project construction content. 6、The project application process consists of three stepsSpecifically, the local government screens reserve projects, the national government reviews the projects and pushes them, and the policy banks review and issue loans. 