The China Banking and Insurance Regulatory Commission (CBIRC) has called for commercial banks to step up lending to manufacturers as part of efforts to help China shores up its status as a “great manufacturing power.”
CBIRC outlined a range of measures to help advance the goals set by the Chinese Communist Party (CCP) of “placing the focus on the real economy and firmly and unwaveringly creating a great manufacturing power.”
These measures include:
- Guiding banks to expand the vigour of lending support, and allocate lending terms on the basis of the actual production and financing needs of enterprises. Increasing medium and long-term lending to the manufacturing sector, lightening excessive reliance on collateral, and raising the share of credit loans.
- Encouraging banking and insurance sector institutions to develop financial products that better suit tech innovation, with focused support for advanced manufacturing and core technology products. Actively driving new models of financing such as the use of intellectual property as collateral, and better serving “asset light” innovative tech enterprise.
- Driving the development of supply chain financing. Banking and insurance institutions should employ their advantages when it comes to financial data and resources to provide bespoke financial services plans to core enterprises and upstream and downstream enterprises in the manufacturing sector, and “vigorously protect” the stability of the industrial supply chain.
- Deep implementation of targeted polices for alleviating the difficulties of enterprises adversely affected by the COVID-19 pandemic, as well as reductions in fees and the transfer of profits. CBIRC has pushed for banks to implement phase-based deferrals of principal and interest repayments for affected enterprises, while also focusing on reductions in the overall financing costs for manufacturing sector enterprises.
In 2020 the manufacturing sector loan balance of Chinese banks increased by 2.2 trillion yuan, while medium and long-term loans to the manufacturing sector increased by 1.7 trillion yuan. New loans to the tech manufacturing sector were 620 billion yuan.
CBIRC said that future steps would include “guiding banking and insurance sector institutions to improve financial services for the manufacturing sector in accordance with the principles of the market and the rule of law,” in order to “assist the development of a great manufacturing power.”
CBIRC also called for “driving the opening of the banking and insurance sectors at a higher level, and further improving the management system for the negative list for foreign investors,” while also pushing for further expansions in financial inclusion lending to micro and small-enterprises.