The Chinese central government is expected to launch a raft of new policies to step up financial inclusion and channel more funds to small businesses following China’s Two Meetings in May.
Data from the China Banking and Insurance Regulatory Commission (CBIRC) indicates that as of the end of April China’s micro-and-small enterprise (MSE) loan balance was 12.79 trillion yuan (approx. USD$1.8 trillion), for a YoY rise of 27.34%, far outpacing growth in other forms of lending.
18 national commercial banks provided interest rates of 4.94% for financial inclusion loans to MSE’s, 0.5 percentage points beneath the 2019 rate.
CBIRC said that Chinese banks had also provided extensions on principal and interest repayments for the over 1.2 trillion yuan in financial inclusion loans to micro, small and medium-sized enterprises (MSME).
The Chinese central government has stepped up efforts to shore up financial inclusion since the COVID-19 outbreak, which led to a 6.8% decline in China’s GDP in the first quarter of 2020.
Wang Qing (王青), chief macro-analyst with Golden Credit Rating International (东方金诚), said to Securities Daily that he expects the launch of another raft of macro-economic response policies to COVID-19 pandemic following the holding of China’s national congressional meetings in May.
MSE’s will become the focus of policy support in areas including fiscal, monetary, social welfare and employment policies, particularly given the role they can play in shoring up job levels.