The collapse of Silicon Valley Bank has caused panic not just in the U.S. tech industry but also in China, where the bank has been a key player for years among Chinese startups.

In recent days, many startups in China have issued statements to reassure their investors that their deposits with SVB will not impact their operations.

Before the bank failed and was taken over by U.S. regulators this month, Silicon Valley Bank was the 16th-largest American bank. In foreign markets, SVB’s reputation for financing about half of all U.S. venture-backed technology and health care companies made it a popular choice for companies, including those based in China and backed by U.S. venture capitalists.

BeiGene, one of China’s largest biotech companies that specializes in the development of cancer drugs, said that the collapse of SVB would have “no major impact” on its operations, and that its uninsured cash deposits in Silicon Valley Bank totaled only $175 million, or about 3.9% of its cash and other investments.

Zai Lab, a biopharmaceutical company headquartered in Shanghai, issued a statement saying that SVB’s collapse would have no impact on its operations, including the ability to pay wages and make payments to third parties.

Other startups, including Andon Health, Sirnaomics, Everest Medicines and Jacobio Pharma, have issued similar statements.

After SVB failed, the Biden administration stepped in and ensured that all customers would be able to get their deposits back, even those who had more than $250,000 in their accounts. That’s the maximum amount that the Federal Deposit Insurance Corporation typically covers when a bank fails, but more than 90% of Silicon Valley Bank accounts were above that amount.

With their SVB deposits frozen, many companies could have been at risk of failing themselves, so the Biden administration said it would step in to guarantee they would get their funds back.

FDIC reimbursements for Chinese customers?

On Chinese social media, there has been concern that the reimbursements may apply only to customers in America.

“Is it true that only depositors who are U.S. citizens can get their money back? What about us?” asked one post on Weibo, the Chinese version of Twitter.

William Hanlon, a partner at Seyfarth Shaw LLP, told VOA Mandarin in an email that the FDIC as receiver “will not categorize account holders by nationality” and “will treat all depositors equally based on their status as depositors.”

David M. Bizar, another partner at Seyfarth Shaw, said the FDIC is continuing to operate SVB as a full-service bridge bank while it searches for buyers of the bank’s assets.

“It can be expected that the United States will continue to maintain these deposit accounts and keep them from losing their value so long as it maintains them in its receivership, and that the FDIC as receiver will not sell these deposit accounts to purchasers who would be permitted under the sale agreements to reduce their values after the transfers,” he told VOA.

So far, several Chinese companies have publicly said they were able to withdraw all their deposits at SVB.

SVB’s role in China

The now-failed SVB carved out a unique role in the Chinese banking scene. It served roughly 2,200 clients and advised government regulators who were eager to build the country’s tech sector. The Santa Clara, California-based bank supported startup companies that not all banks, especially the big commercial ones in China, would accept because of higher risks.

In 2010, then-CEO Ken Wilcox brought the entire board of directors to China to showcase the importance he attached to the China market, according to Chinese media reports. In a 2019 interview, when he was SVB’s chief credit officer, he said SVB was “a model bank for China.”

SVB approached China in two different ways. One involved wholly owned operations in major tech centers, including Beijing, Shenzhen and Shanghai, where it advised startups on how to manage overseas funding. The other involved a 50-50 joint-venture with Shanghai Pudong Development Bank, also known as SPD Silicon Valley bank, that operates under a similar model as SVB.

Following the collapse of SVB, the Chinese policymakers signaled stricter oversight to improve financial market security.

The South China Morning Post quoted Liu Xiaochun, deputy director of the Shanghai Finance Institute, as saying it was inappropriate to set up a similar specialist bank in China.

He argued that to avoid potential losses in supporting tech and health startups, large commercial banks should establish branches to finance innovation, while managing risk exposure at headquarters.
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У заяві фонду зазначено, що зміни в його політиці фінансових гарантій будуть застосовуватися до країн, які зазнають «екзогенних потрясінь, які перебувають поза контролем влади країни та сфери її економічної політики»
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China’s central bank on Friday announced a cut to the amount of cash banks are required to hold in reserve for the first time this year, in a move designed to shore up an economy weakened by the pandemic.

The People’s Bank of China (PBOC) said it would cut the reserve requirement ratio by 0.25 percentage point starting March 27, which would allow commercial banks to lend more to businesses.

This would bring the weighted average reserve requirement ratio for financial institutions to around 7.6%, the central bank said.

The PBOC said the latest cut was intended to “improve the level of service to the real economy.”

The rate was last cut in November, when the world’s second-largest economy was heavily hit by strict COVID-19 curbs.

China is still grappling with the fallout of its zero-COVID policy, which included harsh lockdowns and mass business closures, hitting supply chains and employment.

The country has set an economic growth target of “around 5%” for 2023, one of the lowest in decades.

Authorities reported a rebound in retail sales in January and February, after the country abandoned zero-COVID controls and a massive exit wave of infections quickly subsided.

But Premier Li Qiang has warned that the growth target was “not easy” to achieve as a grinding property crisis continued and global demand slowed.
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Більшість постачальників частково знизили вартість у каталогу на продукти для армії після скандалу, хоча по багатьох ключових позиціях вони все одно залишаються вищими, ніж у роздрібних мережах
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Central African economy ministers are calling for investing in energy and farming as Africa’s poorest region struggles to recover from natural disasters, armed conflicts, and fallout from Russia’s invasion of Ukraine.  Heads of state from the six nations of regional bloc CEMAC meet Friday to discuss the challenges. 

Economy and integration ministers of the Central African Economic and Monetary Community, CEMAC, say most of their 55 million civilians live in abject poverty that has only been made worse by the last few years of global troubles.

Ministers of the six-nation-bloc, which includes Cameroon, the Central African Republic, Chad, Equatorial Guinea, Gabon, and the Republic of Congo, met Thursday in Yaoundé.

President of CEMAC Daniel Ona Ondo, who was born in Gabon, said Russia’s invasion of Ukraine is the latest in a series of global disasters to impact the region.

He said the ministers’ meeting strongly recommended huge investments in agriculture and energy to end over dependency on imported food and petroleum products from Russia and Ukraine.

Before Russia’s invasion of its neighbor, Central African states’ imports from Russia and Ukraine accounted for 60 percent of their fuel and 80 percent of their wheat.

Last July, Cameroon, the Central African Republic, and Gabon reported fuel shortages they blamed on disruptions from Russia’s war.

CEMAC says the war caused a sharp increase in prices that member states paid for fuel and fertilizers and added pressure on the region’s farmers, who were already struggling from conflict and climate shocks.

Ondo said armed conflicts and political unrest in the region also added to the challenge for economies to recover from the COVID-19 pandemic.

Despite the setbacks, Cameroon’s Minister of the Economy Alamine Ousman Mey voiced an optimistic outlook.

Mey is also president of CEMACs council of ministers of the economy and integration.

He said although central African states face many security and environmental shocks, and an influx of refugees and displaced persons, Cameroon, Chad, Equatorial Guinea, Gabon, the Central African Republic, and the Republic of Congo have shown resilience.  Mey said the economic growth rate was maintained at three percent in 2022.  He said CEMAC will always work for the interest of its people despite the challenging world economy and severe crises.

The ministers said they will propose a plan for improving conditions through energy and farming when heads of state meet in Yaoundé on March 17.

Ernest Moloua is an economist at the Cameroon’s University of Buea.

He said the region’s leaders should push harder for the free movement of people and goods as part of the African Continental Free Trade Area.

Speaking via messaging app from Buea, he says the trade deal provides a lot of opportunities for CEMAC if the heads of state take it seriously.

“The most important thing for CEMAC is to improve on public infrastructure, improve on the communication and telecommunication infrastructure, improvement of roads, improvement of railway links.  When this happens then the region places itself in an advantageous position to reap the benefits that will come from the continental free trade area,” said Moloua.

CEMAC says Friday’s heads of state summit will focus on structural reforms to deal with the economic consequences of the COVID pandemic and Russia’s war on Ukraine.
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