China’s government pledges to help business access funding

China’s policymakers will take steps to reduce financing costs and ensure businesses have access to funding in order to boost the country’s economic recovery efforts, officials and experts have said.

Pan Gongsheng, Governor of the People’s Bank of China (PBOC), the country’s central bank, said that the country still has the scope to further cut the reserve requirement ratio – the proportion of money that lenders must hold as reserves – as ongoing macroeconomic adjustments are needed to cope with complex and changing international and domestic events.

Addressing a news conference at a session of the 14th National People’s Congress, the nation’s top legislature, Pan said the average reserve requirement ratio of China’s banking industry is 7% after a 50-basis-point cut in February, and has room for further cuts.

The overall financing costs will be further lowered, Pan said, as the PBOC will deem keeping prices stable and promoting a moderate recovery in prices as important considerations of monetary policy adjustments, while taking into account the soundness of banks’ balance sheets.

“We still have enough tools and enough policy room for manoeuvres,” Pan said, adding that the central bank will also set up a lending facility to support technological innovation and transformation.

Wang Tao, head of Asia economics and chief China economist at UBS Investment Bank, said she expects to see cuts in policy interest rate benchmarks of 10 to 20 basis points and a 25-basis-point required reserve ratio cut this year, which will help sustain annual credit growth of around 9.5%.

The recently published Government Work Report outlined Beijing’s plan to implement monetary policy in a flexible, appropriate, targeted and effective way while making efforts to enhance the underlying stability of the capital market.

“Policymakers will not hesitate to take resolute measures to correct market failures and forestall systemic risks if the capital market experiences extreme volatility,” said Wu Qing, chairman of the China Securities Regulatory Commission (CSRC).

“Protecting the lawful rights and interests of investors, especially small and medium-sized investors, is the most important and central task of the CSRC,” Wu said.

 

Finance ministry produces development plan

China’s Minister of Finance, Lan Fo’an, has outlined the department’s plan for advancing high-quality development in China in 2024.

The ministry will increase financial support for innovation, industrial upgrades and the cultivation of developing industries, Lan told the recent China Development Forum 2024 in Beijing.

The ministry will also focus on expanding profitable investments and driving potential consumption, the minister said.

In this regard, the ministry will support the large-scale renewal of equipment and the trading-in of consumer goods. It will treat all types of businesses fairly in terms of tax relief and government procurement, Lan added.

Additionally, the ministry will allocate more financial resources to education, healthcare, social security and environmental protection, while intensifying communication with other major economies around macroeconomic policies, he said.

Efforts will also be made to advance the country’s financial and tax reforms, the minister added.

Also speaking at the Forum, Vice Commerce Minister Guo Tingting pledged that the government will to treat foreign companies the same way as domestic peers in a bid to attract more foreign investment and increase cooperation and expertise.

“China will fully guarantee national treatment for foreign companies, so that more foreign companies can invest in China with confidence and peace of mind,” Guo said.

He added that China will continue to open up high-level areas of industry and finance and create more market opportunities, and will firmly safeguard a multilateral trading system with the WTO at its core, Guo said.

Addressing delegates at the Forum, Premier Li Qiang said China will continue efforts to build a first-class business environment and to welcome enterprises from all over the world to invest in the country.

More than 100 overseas executives and investors attended the annual China Development Forum, including companies with deep supply chains in China such as Apple and Siemens.