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New regional bank to propel go-west drive?
By Liu Weiling (China Daily)
Updated: 2006-03-11 06:51

It is still very likely China will set up a specialized bank to fund the nation's massive "go-west" campaign, according to Shaanxi Governor Chen Deming.

"The possibility of setting up the Western Development Bank is increasing ... as the central government is now extending more support to regional banks," he told China Daily on Friday.

Ever since the central government launched the western development programme in 2000, whether or not a regional bank is needed has been a hot topic.

Provinces and autonomous regions in western China hoped a specialized bank could help ease a cash thirst in the region. However, the proposal was put aside; opponents said the China Development Bank could play a role while other State-owned commercial banks could be encouraged to engage in pooling funds for the western area.

But the recent establishment of China Bohai Bank, a Tianjin-based bank which mainly aims to serve the fast growth of Bohai Bay, and a widely-discussed plan to establish a bank to serve the revitalization the Northeast China, have given hope to officials in China's west.

A special team will be set up by the Shaanxi provincial government this year to conduct a feasibility study.

"We are keen to set up the bank," Chen said. "I have exchanged views with heads of other provinces and autonomous regions in the region and we believe it is feasible."

Chen said he believes the bank will serve infrastructure construction and the development of key sectors in northwestern areas. He said it should be funded mainly by the government while funds from enterprises or other sectors would also be welcome.

"Overseas funds, including those from Hong Kong, can also be introduced," he said.

Despite the central government's huge investment in western areas in recent years, Chen said, a lack of capital remains a big headache for the region. Only around half of its bank deposits are reinvested within the region.

The governor said the resource-rich province will invest heavily in the development of the high value-added energy sector, in particular the coal industry.
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