The China Banking and Insurance Regulatory Commission (CBIRC) plans to launch a new set of policies to support the growth of private-sector enterprises.
A CBIRC official said to domestic media on 24 March that it will soon launch “category-based implementation of policies to support the healthy development of civilian-operated enterprises.”
The policies will include encouraging banking and insurance sector financial institutions to increase their medium and long-term funding support, extending loan repayment deferrals for micro and small-enterprises (MSE), and new credit and lending support plans.
CBIRC outlined a total of six measures in particular, including:
- Require that banks provide preferential measures to civilian-operated enterprises with “outstanding primary operations, stable finances and main shareholders and actual controllers who have excellent credit,” including reductions in excessive dependence upon collateral guarantees and expansions in lending.
- Encourage banks and insurers to significantly increase medium and long-term funding support for civilian-operated tech enterprises that are in advanced manufacturing or strategic sectors, or have independently controlled industrial supply chains. Actively develop insurtech, continue to improve technological innovation financing services, support breakthroughs in core technologies, foundational research and commercialisation, and support innovations in collateralised financial products based on intangible assets.
- Support banks and insurers in the lawful and compliant undertaking of operational cooperation with civilian-operated enterprises that are capable of engaging tech innovation and civilian Internet platform enterprises.
- Extend financial inclusion loan repayment deferral policies and loan support plans for MSE’s that have strong market prospects, strong employment generation capability, and satisfy MSE financial inclusion standards.
- Guide banks and insurers in adopting tailored support and disposal measures for civilian-operated enterprises that temporarily meet with difficulties, in accordance with the principles of the market and the rule of law, and vigorously dissolve liquidity risk. Encourage banks and insurers to organise creditor’s rights committees for those civilian-operated enterprises that temporarily meet with difficulties yet can optimise and upgrade the economic structure and possess definite competitive capability.
- With regard to civilian-operated enterprises that meet with risk, require that they “save themselves with amputation,” divest themselves of assets unrelated to their main operations, and focus their energy upon easing risk. Encourage banks and insurers to use methods such as capital increases, share expansions, financial restructuring, merger and restructuring, and market-based debt-equity swaps to help enterprises to optimise their debt structure and improve corporate governance.
CBIRC data indicates that the total volume of lending by financial institutions to civilian-operated enterprises has seen marked growth in recent years.
As of the end of 2020 the national loan balance to Chinese civilian-operated enterprises was close to 50 trillion yuan, for a YoY rise of over 14%.
The financial inclusion MSE loan balance was 15.3 trillion yuan, for a YoY rise of 30.9%, 18.1 percentage points ahead of growth in all loans.
The MSE loan balance of China’s big state-owned banks saw growth of 54.8% in 2020.