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China’s real economy basks in attentive financial support : Economic Watch
BEIJING, Aug. 24, 2018 (BSS/Xinhua) – China’s real economy is enjoying
more support from the financial sector as policymakers continue to roll out
tailored policies.
China’s policies since 2018 to tackle corporate financing difficulties and
prompt the financial sector to better serve the real economy have taken
effect, Zhu Hexin, deputy governor of the People’s Bank of China, told a
press conference Tuesday.
“Generally speaking, these policies have been implemented in an orderly
manner and taken effect gradually,” he said, referring to efforts including
maintaining liquidity in the banking system and optimizing loan structure.
Policymakers aim to accomplish the dual-task of taming financial risks and
promoting the sector to play a more significant role in bolstering the real
economy, in particular, cash-hungry private and small businesses.
In the first half of 2018, the government made significant efforts to cut
costs for the real economy, including maintaining robust public spending and
scaling up tax and fee cuts. The government also introduced tax incentives
and other measures to make financing more accessible and affordable for small
and micro enterprises.
Banks and insurers have been told to strengthen their financial services
to small- and micro-enterprises, private firms, infrastructure projects and
foreign trade companies, according to a document released last week by
China’s Banking and Insurance Regulatory Commission (CBIRC).
The document urges lenders to offer qualified cash-starved small and micro
firms with continuous credit supply, increase the proportion of medium- to
long-term loans, and reduce loan costs.
China’s new yuan-denominated loans stood at 10.48 trillion yuan (1.5
trillion U.S. dollars) in the first 7 months, and bank lending to small and
micro firms rose 1.6 trillion yuan, faster than the increase in overall bank
loans during the period.
“Loans to infrastructure and small firms contributed half of the total
last month, a sign that the targeted credit policy has started to take
effect,” said Wu Wen with Bank of Communications.
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More funding will also be channeled into shoring-up weak links in the
country’s infrastructure development, spurring consumption and undergirding
foreign trade companies.
The government said major export-oriented enterprises facing temporary
downturns will receive special support in financing to stabilize their
footing in the international market.
Subsequent regulatory policies will direct more bank lending to targeted
areas and increase the supply of low-risk assets, Wu said.
The insurance sector is also expected to play a bigger role in boosting
China’s real economy, as the CBIRC highlights its flexibility in serving
major national strategies and key projects.
“Insurance funds have emerged as an important catalyst to real economy
transformation and industrial structure revamp,” said Zhu Junsheng, a
researcher with the Development Research Center under the State Council.
“Concerns over government’s debt have seen less involvement of insurance
funds in local infrastructure development. But as regulators are fine-tuning
the transmission mechanism of monetary policy, the situation will change to
some extent,” Zhu said.
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