2023-08-31 08:22:25
A view of the PBC building in Beijing Photo: VCG
China is set to further increase financial support for private companies by introducing measures to raise the ratio of loans to private companies, according to the People’s Bank of China (PBC), the country’s central bank.
The drafted guideline comes as China accelerates efforts to shore up confidence in private companies, a mainstay of the country’s economic expansion.
Chinese experts said the possible publication of the guideline shows that policymakers are aware of the financing needs of private companies and are taking steps to improve the process.
The strengthened efforts will help improve insufficient domestic demand and also stimulate economic recovery with more confidence, they said.
The guideline will focus on the difficulties of private companies and stress that financial institutions should eliminate ownership discriminations in providing financial services, Ma Jianyang, deputy director of the PBC’s financial market department, said on Wednesday, according to the news outlet. Stcn. com.
The central bank will facilitate financial channels including shares, bonds and loans, and will also guide financial institutions to increase lending and support more bond issues, Ma said.
The central bank will maintain reasonable and sufficient liquidity. In terms of monetary policy, more financial resources will be directed to private and small and micro enterprises, PBOC Governor Pan Gongsheng told the meeting.
Private companies have relatively higher demand for financing than state-owned companies, but typically receive less support, which is not in line with the current goal of stabilizing economic development, said Xi Junyang, a professor at Shanghai University of Finance and Economics. on Wednesday.
The strengthened support will provide banks with more tools and at the same time facilitate financing channels for companies in order to reduce potential risks for lending banks, and banks will then be able to intensify financial support to domestic companies – especially to small and medium-sized enterprises (SMEs) – with fewer worries, Hu Qimu, deputy secretary-general of the Forum 50 Integration of Digital Real Economies said on Wednesday.
Hu noted that the main financing methods for domestic enterprises are indirect sources such as loans, with a relatively small number of enterprises choosing direct financing. The proposal to smooth out the main financing channels of equity, debt and loans will further alleviate the risks for SMEs seeking financing.
Private companies play an indispensable role in the nation’s economic development, contributing to a wide range of sectors, from employment to commerce.
In July, the Chinese authorities issued a guideline to boost the growth of the private economy, pledging to improve its business environment, increase political support and strengthen legal guarantees for its development.
The country will help grow, improve and strengthen the private economy so that it can play a greater role in advancing national rejuvenation, according to the document.
Many representative financial institutions participated in the meeting on Wednesday, along with more than 20 representatives of private companies from the real estate, traditional manufacturing, agriculture, new energy and high-tech sectors.
Kong Weijian, chairman of the board of directors of Beijing Deqingyuan Agriculture Technology Co, said the company hopes to introduce special financial policies for agricultural enterprises, Stcn.com reported.
Privately owned companies account for 63% of those listed on the Shanghai and Shenzhen markets, and their combined market capitalization accounts for 41% of the total, according to Wang Jianjun, vice president of the China Securities Regulatory Commission (CRVS). .
In the past three years, private listed companies have distributed more than 990 billion yuan ($136 billion) in cash dividends, accounting for more than 40% of their profits during the period.
Wang said the CRVJ will make full use of tools such as stocks, bonds, funds, futures and real estate investment trusts to support the development and growth of the private economy.
Zhang Xiaodong, executive vice president of the Bank of China, said on Wednesday when presenting interim results for 2023 that the bank will increase lending support to key industries such as integrated circuits, new energy, automobiles and lithium batteries.
(Web editor: Zhao Jian, Zhou Yu)
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