Chinese Central Bank Calls for Loosening Risk Restrictions when Lending to Manufacturing Sector

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The People’s Bank of China (PBOC) has called for financial institutions to loosen their risk requirements for lending priority areas

Zou Lan, head of PBOC’s financial markets department, said that banks should “appropriately increase their risk tolerance and increase medium and long-term lending to the manufacturing sector.”

Zou made the remarks on 23 November at a routine press conference held by the State Council.

“The next step for the financial authorities is to continue to deepen financial supply side structural reform, drive financial institutions to improve internal resource allocation, optimise external incentives and constraints, make servicing the real economy a greater priority, and guide financial institutions in directing more resources towards key areas of the real economy such as manufacturing, micro and small-enterprises and green development.”

In order to ensure that more resources are directed to these priority areas, PBOC will continue to “make comprehensive use of multiple monetary policy tools, maintain rationally ample liquidity, deepen market-based reform of interest rates, improve market-based interest rate formation and transmission mechanisms, continue to unleash LPR reforms effects, and drive declines in the overall costs for enterprise financing.”

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