Sign in
  • Home
  • About
  • Research
  • Banking
  • Economy
  • Finance
  • Fintech
Sign in
Welcome!Log into your account
Forgot your password?
Privacy Policy
Password recovery
Recover your password
Search
Logo
Sign in
Welcome! Log into your account
Forgot your password? Get help
Privacy Policy
Password recovery
Recover your password
A password will be e-mailed to you.
Wednesday, March 22, 2023
Sign in / Join
  • Home
  • About
  • Research
  • Banking
  • Economy
  • Finance
  • Fintech
Facebook
Twitter
Logo
  • Home
  • About
  • Research
  • Banking
  • Economy
  • Finance
  • Fintech
Home Banking Financing Costs for Chinese Companies Hits 7.6%, Over 10% for Small Businesses
  • Banking
  • Economy
  • Finance

Financing Costs for Chinese Companies Hits 7.6%, Over 10% for Small Businesses

By
CBNEditor
-
February 5, 2018
675
Facebook
Twitter
WhatsApp
Linkedin

    A new study points to exorbitant financing costs for actors in China’s real economy.

    The China Social Financing Cost Index (中国社会融资成本指数) prepared by Tsinghua University in conjunction with financial news organisation Caijing was released Beijing on 1 February.

    “Social financing” in the Chinese context typically refers to borrowing by non-state entities.

    The index indicates that the average financing cost for Chinese companies currently stands at 7.6%, with the average bank loan financing cost at 6.6%, and the average financing cost for bank’s acceptance bills at 5.19%.

    For corporate bonds the average financing cost is 6.68%, while the average cost for trust financing, financial leasing and factoring are 9.25%, 10.7% and 12.1% respectively.

    Micro-loan companies and Internet lending platforms charge the most for funds, with average financing costs of 21.9% and 21.0% respectively.

    The average financing cost for listed companies via equity pledged lending is 7.24%.

    Bank loans currently account for 54.84%of enterprise social financing, while corporate bonds comprise 16.5%, bank’s acceptance bills 11.26%, trust financing 7.66% and financial leasing 3.95%.

    Factoring accounts for 0.44%, micro-loan companies 0.87%, online lending 1.1% and equity pledged financing 3.39%.

    Gao Liankui (高连奎) who lead the study said that the average social financing cost of 7.6% only represents interest rate costs, and that when transaction fees, evaluation fees and other costs are included, China’s average social financing cost rises to in excess of 8%, which is a huge burden of companies.

    Gao further points out that most small and medium-sized enterprises in China face financing costs of over 10%, given that reading for average social financing cost is pulled lower by bank loans.

    Given that there isn’t much room for further tax cuts, Gao said that he government should focus more on reducing financing costs to drive economic efficiency and growth.

    “China’s total social financing balance was 171.23 trillion yuan as of September 2017,” said Gao.

    “When social financing which wasn’t caught by statistics is added, a conservative estimate of China’s total social financing would be around 200 trillion yuan.

    “If the interest rates for financing can be cut slightly, this would reduce the cost burden on companies by 2 trillion yuan, and would have extremely pronounced effects.”

    Facebook
    Twitter
    WhatsApp
    Linkedin
      CBNEditor

      RELATED ARTICLESMORE FROM AUTHOR

      Total Social Financing Hits 21 Trillion Yuan in First Half of 2022

      Total Social Financing up 10.5% YoY at End of May: PBOC Data

      Total Social Financing at 6.17T Yuan in January, Outstanding TSF Rises 10.5% YoY

      Search

      ABOUT US

      China Banking News covers all the latest news and development in the Chinese finance and fintech sectors.

      Contact us: [email protected]

      FOLLOW US

      Facebook
      Twitter
      • Home
      • About
      • Research
      • Banking
      • Economy
      • Finance
      • Fintech
      • Property
      • Sitemap
      • Subscribers