Photo taken on Nov. 2, 2021 shows a sock factory equipped with intelligent devices and digitalized system in Zhuji, east China's Zhejiang Province. (Xinhua/Xu Yu)

China will adopt market-based measures to double down on financial support for micro, small, and medium enterprises (MSMEs), to support market players and cushion the new downward economic pressure, the State Council's Executive Meeting chaired by Premier Li Keqiang decided on Wednesday.

The meeting noted the importance to act on the guiding principles adopted at the Central Economic Work Conference, put economic development front and center, prioritize stable performance while pursuing progress, maintain stability on the six priority fronts and provide protections in the six key areas.

"The MSMEs and the self-employed are facing great difficulties. In the first half of next year, the impact of the commodity price rises will be felt by downstream enterprises and add to their pressure. We need to take multi-pronged measures to help the smaller businesses and the self-employed to get through this difficult period," Li said.

The meeting decided to replace the inclusive loan repayment extension support tool for micro and small enterprises (MSEs) with inclusive loans for them. From the beginning of next year till the end of June 2023, the People's Bank of China will provide funds to local banks who issue inclusive loans to MSEs and the self-employed equivalent to one percent of the increase in their loan balance, to encourage them to issue more such loans.

From next year, inclusive credit loans to MSEs will be incorporated into the re-lending program for agriculture and small firms. The 400-billion-yuan (about 63 billion U.S. dollars) re-lending quota previously designated for MSE inclusive credit loans can be rolled over, and expanded if needed. Qualified local banks making inclusive credit loans to MSEs can apply to the People's Bank of China for low-cost re-lending financial support.

"These are relief policies for businesses. We must get them started fast, make sure they're easy to do, and deliver real results," Li said.

The meeting stressed that an integrated financing credit service platform network will be put in place at the national level, with a focus on financing service for MSMEs. On the premise of law compliance and data security, information regarding business registration, administrative penalties, court judgments and its enforcement, tax payments and social insurance contributions will be shared, to help banks raise their capacity for serving MSMEs.

Regulations will be improved concerning evaluation of financial institutions' performance on loan-issuing to MSMEs, and exemption of liability when due responsibilities are fulfilled. Financial institutions will be supported to issue special financial bonds for MSEs. The size of government financing guarantee targeting MSEs will be expanded and its cost lowered.