China’s Private Enterprise Loan Balance Posts Double Digit Growth in 2021

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The Chinese banking sector posted robust growth in lending to private enterprises in 2021.

As of the end of 2021 China’s private enterprise loan balance stood at 52.7 trillion yuan, for an increase of 5.5 trillion yuan, or 11.5%, that year, according to data from the China Banking and Insurance Regulatory Commission (CBIRC).

Th average annualised interest rate for private-enterprise loans was 5.26% at the end of 2021, for a decline of 0.09 percentage points compared to the start of that year.

CBIRC said that in recent years it had “continued to improve the policy system for finance to service private companies, and pragmatically driven banking and insurance institutions to continually improve and strengthen financial services for private enterprises.”

According to CBIRC key measures have included:

  • Fair and targeted development of private enterprise credit operations, and conferring private enterprises with treatment equal to state-owned enterprises in terms of loan interest rates and loan conditions.
  • Expanding the vigour of positive incentives, setting annual targets for private enterprise services, and raising the weighting of improvements to private enterprise financial services in assessments.
  • Expanding the vigour of fee reductions and profits concessions. Strictly banning the collection of irregular fees.
  • Properly handling the relationship between supporting the development of private enterprise and the prevention of financial risk.

CBIRC said that the next step would be to spur banking sector financial institutions to raise risk identification and pricing capability, and continually improve the quality and efficiency of financial services for private enterprises.