The Chinese central government has launched new measures to boost and diversify financing channels for private enterprise in China, with an especial focus on MSE’s.
Beijing recently released the “CCP Central Committee and State Council Opinions on Operating a Better Development Environment to Support Reform and Development of Private Enterprise” (中共中央国务院关于营造更好发展环境支持民营企业改革发展的意见).
The Measures highlight in particular the:
- Improvement of a system for banking sector financial institutions to service private enterprises;
- Improvement of a system for a private enterprise direct-financing support;
- Improvement of a private enterprise financing increased credit support system.
Micro-and-small enterprises (MSE) are set to be a focus of efforts to expand financial support for the private sector, with state media highlighting a lack of financing channels for MSE’s, as well as the ongoing exorbitant cost of funds.
Data from the China Banking and Insurance Regulatory Commission (CBIRC) indicates that the average interest rate for new MSE financial inclusion loans for the period from January to October 2019 was 6.76%, for a decline of 0.64 percentage points compared to the average for 2018.
Beijing plans to provide a further 2 trillion yuan in MSE financial inclusion loans in 2020, with the big five state-owned banks required to keep growth of such loans above 20%.