Premier Li Keqiang hopes to give a boost to secured financing for smaller companies in China with the launch of new measures to shore up the registration of movable property on a nationwide basis.
A meeting of the State Council convened by Li on 14 December passed a resolution to unify the registration of movable property and pledging rights on a nationwide basis starting from 1 January 2021, in order to drive secured financing by enterprises.
“The implementation of unified registration is of benefit to financial institutions comprehensively grasping the movable property of enterprises and related information on ownership, and increasing the willingness of them to provide enterprises with secured financing,” said Li.
“This is also of benefit to optimising the commercial operating environment, expediting finance to more effectively serve the real economy, and micro, small and medium-sized enterprises (MSME’s) in particular, and reduce the burden on companies.”
Registration of movable property and pledging rights has until now been comparatively diffuse, impacting the ability of smaller private companies to access secured financing.
In recent years some Chinese provinces and municipalities have conducted trials for the unified registration of movable property, with private companies and MSME’s accounting for 95% of registrants, and over 80% of related financing sums.
The resolution of the State Council will make the Chinese central bank responsible for the unified management of registration for productive equipment, raw materials, semifinished products and product collateral registration – which had previously been the remit of the State Administration for Market Regulation (SAMR), as well as registration of deposit certificates, financial leasing and factoring.
The Chinese central bank will also provide a 24-7 online platform for registration services.
Movable property that has already been registered will not need to be re-registered following the launch of the unified system at the start of 2021, with relevant authorities required to transfer pre-existing data.