Economic rebound to get full financial support, regulator promises

Financial institutions will fully support China's economic recovery and development to keep economic fundamentals stable and better serve the real economy.

Guo Shuqing, chairman of the China Banking and Insurance Regulatory Commission, made these remarks during an interview with Xinhua News Agency and said the country will continue supporting small and micro enterprises.

China's economy bounced back to growth in the second quarter this year. Macro policies, including tax and employment-oriented policies, have rendered effective support to economic recovery, Guo said, adding monetary and fiscal policy also played an important role. 

Since early this year, the nation has lowered the reserve requirement ratio (RRR) three times, increased re-lending and re-discount quota and unveiled policies allowing small enterprise to provisionally defer loan repayments, which have promoted economic recovery.

Statistics showed that by the end of June, the inclusive loans balance of small and micro enterprises rose 28.4 percent year-on-year. In the first six months, the average interest rate of new inclusive loans stood at 5.94 percent, 0.76 percentage points lower than the previous year.

There are more than 30 million small and micro enterprises in China, and more than 23.6 million or two-thirds of them can acquire bank loans, ranking top in the world, Guo said.

Real interest rates have come down, and aggregate financing is expanding. More importantly, to further relieve financing pressure on small businesses hit by COVID-19, the China Banking and Insurance Regulatory Commission and related departments earlier unveiled a new policy, allowing small enterprise facing liquidity difficulties to provisionally defer loan repayments. By the end of June, a total of 2.46 trillion yuan loans have enjoyed this preferential policy.

China's new yuan loans rose to more than 12 trillion yuan during the first six months of this year, up 2.42 trillion yuan year-on-year, according to data from China's central bank, the People's Bank of China.

Most of them went into the manufacturing industry, infrastructure, technological innovation, small enterprises and the agricultural sector, Guo said.

This year, the manufacturing sector saw a surge in new loans, Guo said, adding that the amount of new loans that has flowed to Chinese manufacturers in the first six months equaled the total of over the past four years.

Medium- and long-term loans, which are mainly used in fixed-asset investment, also rose 13.4 percent. Overall, the loans, no matter in quantity and structure, experienced great improvement and speeded up economic recovery, Guo said.

In the second half, the country will continue inclusive support for small and micro enterprises and promote the development of the capital market and direct financing, according to Guo.

In the first six months, the proportion of direct financing, including stocks and bonds, rose to 36 percent. "We hope to maintain this trend and provide more direct financing to support enterprises."

In the second half of the year, financial authorities will further promote effective policy coordination, strengthen mid- and long-term funds support for advanced manufacturing and strategic emerging industry. For those enterprises facing temporarily difficulties but still have promising future, the government will increase financial support and promote economic and society to resume normal circulation, Guo added.