China c.bank to reduce corporate finance costs and help small businesses

The headquarters of the People’s Bank of China (PBOC), the central bank, is pictured in Beijing, China on September 28, 2018. REUTERS / Jason Lee

BEIJING, Nov. 23 (Reuters) – China will maintain reasonably abundant liquidity and reduce financing costs, especially for small businesses, a central bank official said on Tuesday in a bid to support the slowing economy .

The central bank will deepen interest rate reforms and improve rate transmission to further reduce financing costs, Zou Lan, head of financial markets at the People’s Bank of China (PBOC), said in a briefing .

His comments come a day after Premier Li Keqiang said authorities should avoid a “one-size-fits-all” approach to support economic growth.

Zou said on Monday that the PBOC will push financial institutions to step up lending to manufacturing, small businesses and green sectors.

Xu Xiaolan, vice minister of industry and information technology, said at the same briefing that small and medium-sized enterprises are facing new problems and increased downward pressure.

The government will closely monitor their production and operations, study policy options, and turn progressive preferential policies into long-term policies, Xu said.

The Chinese cabinet said on Monday it would increase financial support for small businesses affected by soaring commodity prices, power shortages and recent COVID-19 outbreaks. Read more

China’s economy faces further downward pressure, but authorities should avoid deploying economic measures in an “aggressive and campaign-like manner,” Premier Li said on Monday, according to state media.

The weighted average loan rate for small businesses was 4.94% in October, down 0.14 percentage points from December 2020, Zou said.

Outstanding loans to small businesses stood at 18.6 trillion yuan ($ 2.91 trillion) at the end of October, up 26.7 percent from the previous year, he added.

China maintained its key rates for loans to businesses and households for a 19th month during its fixing in November on Monday, in line with market expectations.

($ 1 = 6.3851 Chinese yuan)

Reporting by Kevin Yao; Editing by Sam Holmes

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