The China Development Bank (CDB) has agreed to provide up to 30 billion yuan (US$3.7 billion) in loans in the next five years to support Taiwan businesses that invest in the mainland.

According to a deal signed yesterday between the bank and the State Council's Taiwan Affairs Office, Taiwan businesses looking to invest in areas such as infrastructure, basic industries and the high-tech sector are eligible to apply for loans.

The agreement is good news for Taiwan investors, who are thirsty for capital to fund business expansion on the mainland, said Jay Shane, managing director of Hangzhou-based Huatong Industries Inc.

"We hope to enjoy better services from mainland banks," Shane said.

The healthy development of mainland firms funded by Taiwan compatriots benefits China's reunification effort, Shane added.

Chen Yunlin, director of the Taiwan Affairs Office, said cross-Straits economic cooperation has developed rapidly in recent years thanks to the joint efforts of both sides.

By the end of June, the mainland had approved 66,028 Taiwan-backed firms, involving contracted investments of US$84.1 billion and actual investments of US$40.7 billion.

In addition, cross-Straits trade volume had reached US$445.6 billion, with Taiwan exports to the mainland valued at US$372.7 billion.

The mainland has become Taiwan's biggest export market and largest source of trade surplus, Chen said. It has also become the largest recipient of direct investment from the island.

However, the Taiwan authorities have imposed many restrictions on companies and financial institutions with investments on the mainland, Chen said, adding that Taiwan-backed firms face a lot of financing difficulties as a result.

In the early 1990's, the mainland arranged more than 3 billion yuan (US$369.9 million) in special loans to fund fixed asset investments by Taiwan firms. In 2001, the mainland opened its A-share (or state share) market to Taiwan-backed companies.

In March, President Hu Jintao said: "Anything beneficial to Taiwan compatriots and conducive to the promotion of cross-Straits exchanges ... we will do it with our utmost efforts and will do it well. This is our solemn commitment."

Chen Yuan, president of CDB, said the bank has kept a close watch on cross-Straits economic and trade exchanges, as well as Taiwan-backed companies' development on the mainland.

"We will take advantage of our role as a policy institution to actively support Taiwan-invested companies financially," he said.

The support will not only help solve their financial difficulties, but also promote cross-Straits economic and trade exchanges, he added.

(China Daily September 8, 2005)