ZCZC
BCN-24
CHINA-ENTERPRISES-INTEREST-RATE
China to deepen market-oriented interest rate reform, lower interest rate
for smaller firms’ financing
BEIJING, June 27, 2019 (BSS/Xinhua) – China will further cut the real
interest rate on loans to micro and small enterprises, pilot reform measures
regarding financial services for private, micro and small firms, support more
intellectual property pledge financing and credit supply for the
manufacturing sector, and promote innovation and the development of the real
economy, the State Council’s meeting chaired by Premier Li Keqiang decided
Wednesday.
The Chinese government puts great emphasis on financing for micro and small
enterprises. Premier Li has repeatedly highlighted the need for taking a
multi-pronged approach in lowering the real interest rate so as to
meaningfully ease the financing difficulties facing micro and small
enterprises.
It was pointed out at the Wednesday meeting that financing costs for micro
and small businesses have come down over some time, thanks to the combined
efforts made by various authorities in implementing the requirements by the
Central Economic Work Conference and the Government Work Report.
Going forward, liquidity will be kept reasonably sufficient and the lending
rate for micro and small businesses will be further lowered.
“We will keep the prudent monetary policy neither too tight nor too loose,
with anticipatory adjustments and fine-tuning as appropriate, to adapt to the
shifting dynamics in the international and domestic markets,” Li said.
The meeting decided on the following measures. Market-oriented interest
rate reform will be deepened to improve commercial banks’ Loan Prime Rate
mechanism and better harness LPR’s role in shaping the real interest rate.
Banks will be urged to reduce lending surcharges to lower financing costs for
micro and small businesses.
Small and medium enterprises will be supported in bond and note financing.
Regulatory and evaluation methods for commercial banks regarding their
financial services for micro and small firms will be refined.
The goal is to enhance the banks’ lending capacity to smaller firms.
Financial institutions are expected to significantly increase their financial
bonds issued for micro and small businesses this year toward the target of no
less than 180 billion yuan.
MORE/HR/1355
ZCZC
BCN-25
CHINA-ENTERPRISES-INTEREST-RATE 2 LAST BEIJING
The policy incentives for cutting loan guarantee fees on micro and small
businesses must be fully implemented. The role of the State Financing
Guaranty Fund should be harnessed in reducing re-guarantee fees and
incentivizing further cuts in guarantee charges.
It was also decided at the meeting that the central government will provide
fiscal support, in form of reward rather than subsidy, to the three-year,
comprehensive pilot reforms concerning the financial services for private,
micro and small firms in some cities.
These pilot reforms will explore ways to expand financing for these
businesses, make financing easier, lower financing costs, improve the risk
compensation mechanism, and support financial innovation to guide more
financial resources to smaller companies.
“We must use market-oriented reform measures to see that the real interest
rate come down, and reform the transmission mechanism. The purpose of these
measures is to deliver concrete benefits to all market players, micro and
small businesses in particular, and send a positive signal to the market,” Li
said.
To support innovation-driven development, intensify the protection and use
of intellectual property rights, and promote employment, the meeting also
called for expanding the use of intellectual property pledge financing to
widen financing channels for private, micro, small, start-up and innovation
businesses and ease their financing difficulties.
Banks will be guided to formulate separate lending plans and evaluation
mechanisms for intellectual property pledge loans. The non-performing loan
(NPL) ratio of such lending that is no more than 3 percentage points above
the overall NPL ratio will not be considered a minus factor in government
oversight or performance evaluation.
Packaged intellectual property pledge will be explored and the scope of
collaterals and means of disposal will be expanded.
“We must step up the building of an intellectual property information
platform. Intellectual property pledge financing may seem a minor business
for financial institutions, yet in practice, it is of vital importance as it
boosts entrepreneurship and innovation, and helps with the protection of
intellectual property rights,” Li said.
The meeting required improvement of the loan mix and guide more credit
issuance for the manufacturing and service sectors.
Large banks will be encouraged to refine lending evaluation mechanism and
provide targeted rewards to ensure that the balance of total loans, medium
and long-term loans and credit loans for the manufacturing sector this year
will be notably higher than last year.
BSS/XINHUA/HR/1400