China to guide banking, insurance sectors in fund allocation

China will guide its banking and insurance sectors to channel more funds into early-stage startups, long-term research and development projects, and hard tech sectors, said Li Yunze, head of the National Financial Regulatory Administration, on Wednesday.

To this end, the equity investment pilot program by financial asset management companies, which now covers a total of 18 cities across the country, will be further extended to more areas this year, coupled with the plan to allow more financial institutions to participate in the initiative, Li said.

Moreover, greater efforts will be made to support the pilot program aimed at facilitating insurance funds making long-term stock investments, Li said.

On Tuesday, the government approved an additional 60 billion yuan ($8.26 billion) to be channeled into this pilot program, Li said, adding that prior to that, the initiative had attracted over 100 billion yuan investments.

The government will also fine-tune its mergers and acquisitions loan pilot program for tech companies, Li said, detailing that the key changes include increasing the maximum proportion of M&A financing that can be covered by these loans from 60 to 80 percent, as well as extending the loan tenure from 7 to 10 years.

Also, Li said the administration, together with the China National Intellectual Property Administration, will work on a pilot initiative focusing on creating a comprehensive intellectual property financial ecosystem.

The plan is to launch a pioneering trial in innovation-driven regions nationwide to resolve long-standing challenges such as IP pledge registration, valuation, and disposal, truly transforming intellectual property into tangible aids for enterprises seeking financial services and accelerating its translation into real-world productive forces.

China's financial industry achieved stable development last year as reflected by healthy key industry indicators, steady financial reforms, improvement in financial services, and industry governance, among others.

Data from the administration showed that the banking sector's capital adequacy ratio has risen to 16 percent, insurance solvency ratio has climbed to 200 percent, and the non-performing loan ratio has declined to 1.52 percent.

Notably, in 2024, China intensified efforts to dispose non-performing assets, resolving a record 3.8 trillion yuan in bad debts and thereby resolutely holding the bottom line that no systemic risks will occur.

The coordination between central and local financial authorities has been significantly strengthened, and regulatory oversight has continued to enhance, thanks to steady reforms in the financial system, Li said, adding progress can be summarized in three key aspects of increased funding supplies with reduced costs, improvement in quality and efficiency of financial services, and enhancement of financial governance.

New funds provided by the banking and insurance sectors last year reached over 30 trillion yuan, with the average interest rate for newly issued loans dropping by 0.6 percentage points. That has facilitated smoother and more orderly economic and financial circulation, Li added.

Growth rates in loans for key sectors such as the sci-tech and advanced manufacturing significantly surpassed that of the average level of all sectors.

At the same time, the capital replenishment mechanism has become increasingly robust, with the earlier release and implementation of the so-called 10 new guidelines for insurance sector, the steady improvement of wealth management capabilities by asset management institutions, and higher level of financial opening-up.