Shanghai’s Banking Sector Cuts Interest Rates for Small Businesses as Covid Lockdowns Continue

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The Shanghai financial sector has launched a slew of policies at the behest of regulators to support the municipal economy, as the city enters its second month of renewed COVID-19 lockdowns that were first launched at the outset of April.

Since March financial institutions in Shanghai have provided 33.5 billion yuan in loans to 731 pandemic-prevention resources enterprises and logistics enterprises, according to figures released by regulators at a press conference on Shanghai pandemic prevention measures held on 8 May.

Shanghai-based financial institutions have also provided 72.3 billion yuan in loans to over 10,000 enterprises affected by the pandemic lockdowns, especially in sectors including retail, food and beverage, tourism and transportation.

Interest rates for financial inclusion loans to micro-and-small enterprises in Shanghai currently stand at around 4.96%, for one of the lowest rates in China.

Xu Wenjian (余文建), head of PBOC’s financial consumer rights protection bureau, said that strengthening lending had become one of the key areas for the financial sector to help enterprises resume work and production amidst the disruptions caused by the pandemic.

Xu highlighted support efforts in three areas in particular:

  1. Strengthening the stability of total loan growth.
  2. Expanding lending support for financial inclusion demographics.
  3. Strengthening financial services for key areas.

“[We] are mainly making use of the targeted reach role of structured monetary policy tools, guiding financial institutions to expand the intensity of support for tech R&D and tech improvements by enterprises, ensuring the stability of energy supplies, and effectively satisfying financing demand for logistics and transit circuits to flow smoothly,” said Xu.