Chinese Financial Authorities Flag Focus on Financing Challenges of Small and Micro-enterprises

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Several of China’s leading financial authorities have issued calls in concert for measures to resolve the financing difficulties of small and micro-sized private enterprises.

In tandem with the start of the Two Sessions meeting of China’s top legislative bodies at the start of March, the People’s Bank of China (PBOC) and the China Banking and Insurance Regulatory Commission (CBIRC) have both said that they will endeavour to make improvements the financial supply, raising allocation efficiencies and directing more lending resources to small and micro-enterprises as well as “weak spheres” of the economy.

Xiao Yuanqi (肖远企), CBIRC chief risk officer and media spokesperson, said last week that CBIRC would endeavour to deeply advance financial supply side structural reforms with reference to the five key areas of improving the financial supply, optimising the financial structure, reducing financing costs, improving allocation efficiencies and clearing out supply channels.

Improvement to the financial supply will entail increasing effective supply by expanding the number of financial institutions as well as the funds supply, as well as removing or reducing low efficiency supply.

“At present there are over 4800 institutions in the banking and insurance sectors, the vast majority of which are small and medium-sized institutions,” said Yuan.

“The next step will be for CBIRC to continue to increase the number and business share of small and medium-sized banking and insurance institutions; increase the number of special and specialist institutions, while also introducing more specialised foreign institutions via external opening.”

Pan Gongsheng (潘功胜), PBOC deputy governor and head of the State Administration of Foreign Exchange (SAFE), said that the Chinese central bank had four duties with regard to deepening financial supply side structural reforms.

These include maintaining stable monetary policy, firmly advancing capital market reforms, optimising the distribution of large, medium and small-sale financial institutions, and upholding the concept that market demand is the guide when remoulding the operating concept of financial institutions.

Guo Shuqing (郭树清), chair of CBIRC, said that deepening financial supply side structural reforms would require research into specific policies and measures for optimising the banking sector, and actively developing personalised, diversified and customised financial products.

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