A senior figure from one of the Chinese central government’s top agencies has flagged further policy support measures for China’s financial markets during the coronavirus outbreak.
In an interview with state-owned media Zeng Gang (曾刚), deputy-chair of the National Development and Reform Commission (NDRC), said that Chinese policy-formation would need to give full consideration to the heightened level of sensitivity of financial markets to any news on the spread of the coronavirus.
“The main thing is appropriately expanding the vigorous of counter-cyclical adjustment policies,” said Zeng.
“In terms of monetary policy, [we] will select tools and various liquidity operations by looking at actual need; further reduce financing costs for the real economy, and create an appropriate monetary and financial environment to stabilise the economy.”
Zeng said that “fiscal policy will need to play an even more important role,” with potential measures including:
- Appropriately expanding the scope of the deficit;
- Expanding fiscal expenditures in relation to combating the disease;
- Appropriately reducing taxes and fees for industries that are severely impacted by the disease, such as consumer goods and transit;
- Further reducing the burden on small-and-medium enterprises;
- Providing fiscal discounts to certain industries and enterprises;
- Appropriately expanding the scope of infrastructure investments.
Zeng said that aside from existing policy requirements, China’s financial authorities would consider appropriate reductions to the costs of financial institutions, and increases in the ability of financial institutions to serve efforts to combat the spread of the coronavirus.
Specific measures could include:
- Guiding financial institutions to strengthen their support for certain clients via re-lending and re-discounting;
- Expanding the scope of transaction counter-parties for targeted medium-term lending facilities (MLF) to include small and medium-sized banks, increasing the ability of small and medium-sized institutions to service micro-and-small enterprises (MSE’s) and private enterprises;
- Expediting the creation of enterprise credit information sharing platforms, and creating conditions for the use of big data to raise MSE lending efficiency and reduce lending costs;
- Guiding commercial banks in the optimisation of lending technology, innovations in MSE lending methods, including expansions in loan extension and credit loan shares, and reducing excessive dependence upon collateral and guarantees.