China’s Banking Regulator Calls for Lenders to Support Coal Power Sector, Bans Use of Loans for Commodities and Consumer Goods Speculation

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The China Banking and Insurance Regulatory Commission (CBIRC) has called for financial institutions to provide support to the coal power sector following a spate of power outrages around the country.

On 5 October CBIRC issued the “Notice on Matters in Relation to Servicing the Regular Production of the Coal Power Sector and Orderly Circulation of Commodities Markets to Ensure Stable Economic Operation” (关于服务煤电行业正常生产和商品市场有序流通保障经济平稳运行有关事项的通知).

The Notice calls for “guaranteeing reasonable financing demand for productive enterprises in sectors including coal power, coal, steel and non-ferrous metals,” as well as “supervising and expediting banking and insurance sector institutions to fully endeavour to effectively perform financial services work to guarantee power supply for this winter and next spring, and satisfy the rational financing needs of power and electricity suppliers.”

Chinese banks are required to “actively support coal producing regions and key coal enterprises in increasing coal supply, and guaranteeing that the people can pass the winter in warmth.”

The banking authority called for all of its offices and ancillary authorities to “recognise from a high political perspective the major significance of effectively performing current work to protect supply and stabilise prices.”

CBIRC also said that it had “strictly banned the use of banking and insurance funds to participate in commodities speculation for coal, steel and non-ferrous metals,” as part of efforts to “strictly prevent bank and insurance funds from affecting the regular order of commodities markets.

The Notice “strictly bans banking and insurance funds from illicitly entering the stock market, bond market and futures market,” and “strictly bans the misappropriation of various loans, including business and consumer loans, to speculate in high-end consumer products such as Maotai Liquor.”

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