USTDA FUNDS TECHNICAL ASSISTANCE

ON SUB-SOVEREIGN FINANCING FOR INFRASTRUCTURE PROJECTS IN CHINA

FOR IMMEDIATE RELEASE

SHANGHAI, CHINA (July 27, 2004) – On July 23, 2004, the U.S. Trade and Development Agency (USTDA) provided a $165,360 technical assistance grant to the Shanghai Water Services Assets Operation and Development Company, Ltd. related to the issuance of revenue-backed bonds for municipal wastewater projects in Shanghai.

The grant was conferred in a signing ceremony held at the headquarters of the Shanghai Water Services Assets Operation and Development Company in Shanghai. Mr. Geoff Jackson, USTDA Assistant Director for Policy Planning and Regional Director for Asia, signed the grant agreement on behalf of the U.S. Government. Mr. Liu Qiang, Chairman, signed on behalf of the Shanghai Water Services Assets Operation and Development Company.

Shanghai municipal officials estimate that over the next five years they will have to finance a minimum of $4.85 billion related to projects in the water and wastewater sector alone. Both national and local policies impose strict limits on the amount of capital investment that can be made from the municipal budget in the form of contributed equity. Funding from this source is estimated at only $732 million. Multi-lateral and international donor agencies will provide loan funds to cover a small part of the remaining financing gap. The majority of the financing required will have to be raised from domestic non-state sources or the international private capital market.

There are a number of strategies under consideration to assist Shanghai in developing a prudent strategy for raising non-state capital financing in the environmental sector. The USTDA-funded technical assistance will provide detailed information on achieving the necessary financing through the issuance of revenue-backed bonds. This information will assist Chinese officials in determining the best method to proceed in obtaining financing for priority environmental projects on the debt market.

The U.S. Trade and Development Agency advances economic development and U.S. commercial interests in developing and middle-income countries. The agency funds various forms of technical assistance, feasibility studies, training, orientation visits and business workshops that support the development of a modern infrastructure and a fair and open trading environment. USTDA’s strategic use of foreign assistance funds to support sound investment policy and decision-making in host countries creates an enabling environment for trade, investment and sustainable economic development. In carrying out its mission, USTDA gives emphasis to economic sectors that may benefit from U.S. exports of goods and services.

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