China will make more targeted efforts to boost the financial sector's support for the real economy and ease financing woes for small companies, a State Council executive meeting chaired by Premier Li Keqiang decided on Friday.
The meeting heard a report on delivery of the policies regarding accessible and affordable financing for micro and small businesses. "All departments are encouraged to take a multipronged approach, and we must waste no time in helping small companies tackle their liquidity difficulties," Li said. "No loans extended should be willfully withdrawn."
Greater efforts will be made to enhance financial services for the private sector, especially micro and small businesses, those attending the meeting agreed.
The financing channels for small businesses will be widened. The scope of qualified collateral of the medium-term lending facility will be expanded to cover loans for micro and small companies with a credit quota of up to 10 million yuan ($1.44 million) per company. Support will be given to more such companies for equity and bond financing.
Financial institutions will be encouraged to make their lending businesses to micro and small enterprises part of their internal performance evaluation, and to allocate corresponding incentive rewards.
Major commercial banks were called upon to work hard to cut their average lending rate by 1 percentage point in the fourth quarter compared with the first quarter. Unnecessary procedures and surcharges in financing will be removed. The meeting also called for effective measures to prevent credit risks.
Authorities in the financial system will be encouraged to take substantive measures to further tilt policies in favor of micro and small enterprises as well as other private companies, Li said. The government must also provide support in terms of guarantee and taxation, he added.
The meeting also discussed how to better leverage the government-managed guarantee funds to make more financial resources available to micro and small companies. It was decided at the meeting that supporting agricultural and rural development as well as small companies will be the primary business of all government-managed guarantee and reguarantee institutions.
The People's Bank of China, the country's central bank, has conducted targeted cuts to the required reserve ratio four times this year, releasing liquidity of 2.3 trillion yuan. By the end of September, outstanding loans for micro and small companies totaled more than 33 trillion yuan, up by 11.4 percent year-on-year.