ZCZC
BCN-17
CHINA-PRIVATE-BUSINESSES
China localities pledge support for private businesses
BEIJING, Nov. 18, 2018 (BSS/Xinhua) – Authorities in many regions across
China have pledged support for private enterprises in a bid to stimulate
economic growth and boost job creation.
Beijing municipal government is offering customized services to help
privately-owned firms address a wide array of issues.
Local authorities and social capital have set up a capital pool of 35
billion yuan (5 billion U.S. dollars) to help ease liquidity risks for
publicly-traded firms which have pledged shares as collateral for loans,
Beijing mayor Chen Jining said in an interview, adding authorities will
support private firms to issue bonds to raise funds.
Many firms in share pledge financing face the risk of margin calls when
they need to deposit additional money to bring up the margin account to
maintenance levels. If they fail to pay up when the stocks prices fall below
the level agreed upon, lenders can sell the pledged shares, thus triggering
further market volatility.
“The city government in Beijing will clear investment hurdles and open
private capital to over 60 projects with a total investment of 100 billion
yuan,” Chen said.
The Shanghai municipal banking and insurance regulator ordered local
lenders to optimize lending policies and eliminate discriminative barriers,
to create a level playing field to increase lending to private businesses.
The regulator urged the expanding of financial channels and providing
sufficient financial services for private firms at different growth stages.
It also called for more innovative products to increase the availability
of loans for small- and micro-sized enterprises and regulate administrative
fees and reduce borrowing costs for the private sector.
South China’s Guangdong Province, known for its booming private sector,
has the largest number of private firms and the highest related tax revenues
in China. The province issued a package of policies to support private
companies, including lowering the prices of gas and electricity for industry
use and favorable loans to small- and micro-sized companies.
In the old industrial base of Heilongjiang, local authorities will
continue to improve the business environment. Measures include reduction of
taxes and fees, lowering financing costs, creating a level playing field, and
a crackdown on intellectual property right violations and investment hurdles.
The spate of measures across the country came after the central Chinese
authorities pledged substantial policy support for the private sector,
including tax cuts and easier financing.
The private sector plays an important role in the Chinese economy,
contributing more than 50 percent of tax revenue, 60 percent of gross
domestic product, 70 percent of technological innovation, 80 percent of urban
employment and 90 percent of new jobs and new firms.
BSS/XINHUA/HR/1450