Comparative Analysis Of The Functions Of Export Credit Insurance

Nowadays, many countries in the world to some extent take various preferential measures to help the export companies protect against risk, reduce costs and obtain financing in order to promote the development of the countries'foreign trade. Export credit insurance(ECI) as a kind of policy instrument to be approved by the international rules has been brought into its export security system. The promoting effect of export credit insurance for the export companies has become increasingly apparent. The functions of our country's ECI have been improved within 20 years development. In the course of making China trade power, not only did ECI play an important role in guarding against risk, in opening up the international market, in obtaining financing, but also actively cooperate with trade policies of Market Diversification, Reinvigorating Trade by Science and Technology as well as Go Abroad, furthering the adjust of trade mode, goods structure and export market structure. However, compared with the international standards, the functions of ECI have not play fully as a result of the imperfections of its institution and management system, as well as the absence of export companies'awareness in risk management. By contrast, the functions of our country's ECI have advantages and shortcomings. Therefore, we should fully display the functions of ECI so that our foreign trades can continuously expanding.Its functions have time effect which influenced largely by new international trade situation. With the pace of economic globalization and integration, particularly since our country's accession to the WTO in 2006, our country's trade environment has changed dramatically. Our country's international trade has grown rapidly. With the rapid strengthening of the international buyer's market, the use of non-credit settlements has been increasing instead of the letter of credit(L/C) due to its complicated procedures, high costs and stringent review. Flexible settlement has become a trend in the international market which increases the risk of foreign exchange risk. At the same time, with the market opening export enterprises need more financing supports, which support them to develop in the international market. With the current global financial crisis triggered by the USA sub-prime mortgage crisis spreading and deepening, the market liquidity and the confidence of consumer are influenced deeply so that the downward trend of the world economy is more obvious which impact our country's exports seriously. Therefore, how can the functions of ECI be utilized to its limit in order to guide the development of foreign trade reasonable has become an important issue.This article put more efforts into the study of the functions of our country's ECI on the basis of discussion of the fundamental principles. Analyzing the influence of international trade environment on ECI, this article studies the utilizing of the function of ECI with the methods of comparative analysis and case analysis. This article is intended to emphasize the necessity and importance of utilizing its functions at current international trade situation, and base on it to improve the functions.The whole article consists of six chapters: Chapter one serves as the introduction of ECI. The fundamental principles ofECI are made out such as conceptions, characters, categories, functions and effects of ECI. Then it focuses on the utilizing of its function.Chapter two mainly analyzes the risk management functions of our country's ECI. Through introduce current foreign exchange risk that rising with the development of international trade, it studies the performance of this function. And then compared with the other tools to guard against foreign exchange risk it summarize the necessity of ECI.Chapter three is concerned with the market opening function of our country's ECI. It firstly analyzes the current status of Chinese export markets, and concludes that promoting international settlement diversification is one of the most important means to open up the international market widely. Then it gives the opinion that our country's ECI can play a great function on opening up the international market widely. Finally, with the cost analysis of the combination of different settlement with ECI, this chapter analyzes the advantages and disadvantages of this function. Chapter four is about the supporting financing function of our country's ECI.Under the current financial crisis background, this chapter analyzes the necessity to innovate the financing channels. With regard to financing, ECI in China has played an important function in supporting financing, and it play a huge and positive role in economic development. At the same time, this chapter gives a clear direction to improve its financing function by a detailed comparative analysis with other financing means.Chapter five discusses the state policy supporting function of our country's ECI. In response to the requests of WTO after our WTO accession and the current financial crisis, this chapter puts forward the demand on this policy supporting function. Compared with the system of export tax refunds as well as the favorable rate of export credit, this kind of function has plenty of advantages and disadvantage.Based on the four kinds of functions analyzed above, chapter six puts forward some proposals to improve and perfect its functions through three aspects of government, the Export Credit Insurance Agency (ECA) and export companies. It mentions that our government should perfect the ECI laws, strengthens its mechanisms and the supporting efforts. It suggests that ECA should lower the insurance rate, simplify the procedure and strengthen the corporation with bank. It also proposes that we need to give full play to the role of industrial associations, and the export companies should enhance their risk-prevention consciousness.This article combined with the current international situation, so there is great time effect. Comparative analysis and case analysis are this article's another innovation. However, ECI belongs to a quite important economic field between international trade and international finance tat made the study more difficult.