Since the second half of 2008, with the international financial crisis spreading to the real economy, it has exerted enormous impact on the global trade. During the financial turmoil, banks across Europe and America began to tighten credit, which led to a global shortage of trade finance further exacerbated the decline of global trade. According to WTO estimation, in 2009 the world's total volume of goods trade will reduced by 9% compared to 2008, the sharpest drop since WWII. Moreover, the emerging countries are also severely affected, as in the first half of 2009 China's total imports and exports declined 23.5%. Therefore, all countries stress the importance of trade finance during the battle against financial crisis, and it can be said that trade finance plays an increasingly significant role in promoting economic recovery.

Against such a background of global trade, quite a number of domestic enterprises are also encountering an embarrassing situation in which trade becomes futile due to the lack of capital or warranty, despite market demand and order for their products. This has greatly affected factories' normal production as well as the development of local economy. To tackle with the problem, ICBC devotes to further enhancing its efforts in trade finance for the sake of implementing governmental policies that aim to expand domestic demand, secure economic growth and stabilize international trade. During the first half of 2009, ICBC has provided the domestic enterprises with trade finance worth about RMB 520 billion, while by the end of June 30th its balance of trade finance reached RMB 365.7 billion, which grew by nearly RMB 110 billion compared to the beginning of the year, an increase of 42.74%. Through trade finance, ICBC has built a bridge between the two parties of commodity supply and demand, which not only serves to promote normal commodity circulation and wholesome operation of the real economy, but also helps the bank to find a new point of business growth and opens a new way of credit structural adjustment, hence realizing a win-win situation for both the bank and the enterprises.

According to industry insiders, at present over 90% of the global trade activities is dependent on the support of financing, warranty, insurance or other services of trade finance. The current financial crisis further highlights the importance of trade finance, since banks' services of trade finance can not only help enterprises to convert its A/R into working capital in advance so as to increase their capital efficiency, but they can also make use of the bank's credit to improve their level of credit rating in trade, so as to reduce risk and promote successful trade. Besides, trade finance is particularly favored by the many small and medium-sized enterprises as it can match trade directly and mainly focus on the capital flow of trade, which suits the reality of small-scale asset and few credit pledges prevalent in small and medium-sized enterprises, while trade finance also possesses much flexibility in terms of loan period, the amount of credit, the use conditions and the means of warranty. From data of statistics, during the first half of this year, ICBC has provided the small and medium-sized enterprises with different types of trade finance amounting to RMB 173.835 billion, which turns out to be strong financial support to assist the small and medium-sized enterprises in overcoming the difficulties brought about by the international financial crisis.

With the development of market economy, the business models and development patterns of China's enterprises have undergone tremendous changes. The increasing frequency of trade and the complexity of trade chain, logistics chain and capital chain all give birth to a complicated financing demand in the process of trade, which can only be satisfied by a customized banking product. On the one hand, compared to the traditional working capital loan, the product line of trade finance is richer and it can better cater to clients' demand for using capital, which further highlights the applicability and superiority of the product. On the other hand, we should make full use of trade finance to replace the traditional working capital loan, so as to promote the transition of the traditional credit structure and fundamentally solve the problem of "capital" precipitation caused by enterprises' long-term occupation of the traditional working capital loan, as well as the difficulty of loan flow management cased by the mismatch between the working capital loan and enterprises' capital flow and logistics flow. Therefore, trade finance can effectively reduce the risk of banks' credit business.

ICBC's official who is responsible introduces that the first half of this year has witnessed the emerging importance of trade finance to credit structural adjustment and risk control. By the end of June, ICBC's non-performance rate of domestic trade finance business kept at the excellent level of 0.2%, which was lower than the non-performance rate of the bank’s total loan. Meanwhile, the proportion that trade finance balance takes in the balance of working capital loan grew 7.05 percent compared to the beginning of the year, rising by 17.18%.

Due to the fact that trade finance can not only meet effectively clients' demand for trade finance, but is also critical to the credit structural adjustment and risk control of commercial banks, ICBC has already set trade finance as one of its strategic businesses. It strives to constantly accelerate the speed of business innovation and enhance service standard, and as a result its trade finance business displays a sound and rapid development. According to statistics, during the first half of the year, ICBC provides both domestic and overseas enterprises specializing in international trade with the international trade finance worth over USD 43 billion, while by the end of June the balance of international trade finance amounted to USD 11,867 million, rising by 68.42% compared to the beginning of the year. This is a much faster increase of international trade finance in this year compared to other domestic large-scale banks. Moreover, ICBC's international settlement business surpasses USD 300 billion in the first half of the year.

Through brave innovation and learning from the successful experience of international trade finance, ICBC has established a comprehensive system of domestic trade finance, which strongly enables the bank to provide clients with all-round trade finance services in both domestic and international markets. During the first half of the year, ICBC has contributed accumulatively RMB 220 billion of domestic trade finance to enterprises, and by the end of June 2009 its balance of domestic trade finance amounted to RMB 188.549 billion, which increased RMB 87.806 billion compared to the beginning of the year, up 87%. Moreover, the joint development and interaction between the international and domestic trade finance markets not only plays an active role in promoting the production and sales of products for domestic trade, but also provides vigorous financial support to export-oriented enterprises for developing trade and making investment.

Meanwhile, ICBC also utilizes its advantage of abundant products and strong innovative ability to vigorously develop the "supply chain finance" that relies on core enterprises. It actively participates in all steps of the supply chain and includes the core enterprises and quality projects into the supply chain system, covering not only the core enterprises and their upstream suppliers and downstream distributors, but also contractors of quality projects and their upstream suppliers of raw material and equipment. In this way, the many small and medium-sized enterprises, which provide supportive services to the core enterprises, are able to obtain financing support by the orders they receive as well as their accounts receivable, thus effectively activating the entire industry chain of production, supply and sales. Moreover, such a collaboration of finance capital and industrial economy also contributes to the establishment of an industrial ecological model for maintaining the mutual benefit, co-existence, and sustainable development among the bank, the enterprises and the commodity supply chain.

In terms of policy, ICBC has also carefully summarized, integrated and improved its own policies of trade finance by making certain adjustments in some of the credit management policies concerning customer access, approval process, credit authorization management, and authorization transfer management, as well as proposing clear requirement in terms of the trade finance policies and risk supervision for small and medium-sized enterprises, so as to make the policies more favorable for trade finance on the level of policies. Meanwhile, since the demand of trade finance by small and medium-sized enterprises is characterized "short period, high frequency, rapidness", ICBC has also reformed its credit authorization model by appropriately expanding the authorization as well as optimizing, integrating, and streamlining the business process of rating, credit authorization, pledge assessment and business approval, hence further formalizing business operation and improving the response speed and service efficiency to meet clients' demand of trade finance. This provides systematic support for all ICBC branches to make personalized solutions of trade finance by flexibly making use of various product combinations that cater to the diverse demand of market and different types of clients, hence enhancing the efforts of product and business innovation for trade finance.

"To vigorously develop the business of trade finance is one of our essential strategies, since it is not only conductive to our bank's credit structural adjustment and the sustainable development of credit business, but it is also ICBC's social responsibility as a large-scale commercial bank as well as an important way for finance to support economic development", said the ICBC official, "it bears significant meaning for solving enterprises' difficulties, reducing the negative impact of financial crisis, and promoting economic structural adjustment." Meanwhile, ICBC's successful exploration in the field of trade finance service is also widely recognized by the banking industry as well as the international media. During the annual selections hosted by Global Finance (U.S.) and Asset (Hong Kong) this year, ICBC received two grand awards of trade finance, which are, respectively, the "2008 Best Trade Finance Bank in China" and the "2008 Rising Star Trade Finance Bank in China".