The Ministry of Industry and Information Technology (MIIT) has issued a call for China’s banks to increase financial inclusion loans for small businesses to help them weather the impacts of the ongoing COVID-19 pandemic.
On 9 May MIIT issued the “Several Measures for Strengthening Assistance to Micro and Small Enterprises to Alleviate Difficulties” (加力帮扶中小微企业纾困解难若干措施).
The Measures call for local authorities to “actively make arrangements for special relief funds for micro, small and medium-sized enterprises, and expand support for micro, small and medium-sized enterprises that have experienced temporary operating difficulties as a result of the impacts of the pandemic.
“Based on local conditions, [authorities] should provide enterprises and individual industrial and commercial registrants with subsidies as well as loan discounts for building rent, utilities, guarantee fees and pandemic prevention.”
MIIT highlighted the role of China’s big state-owned banks in stepping up lending to small enterprises adversely affected by COVID.
“In 2022 the big state-owned banks are striving to increase financial inclusion loans to micro-and-small enterprises by 1.6 trillion yuan,” said MIIT.
“[They] should adopt loan term extensions, loan roll overs and adjustments to repayment arrangements to provide support to micro, small and medium-sized enterprises that have temporarily met with business setbacks as a result of the pandemic, but have excellent future development prospects.”
Other recommendations in the MIIT Measures include:
- Employing the role of government finance guarantee organisations, and expanding service coverage for micro, small and medium-sized enterprises.
- Supporting banks and futures companies in providing forex hedging to micro, small and medium-sized enterprises.
- Undertaking specialist campaign to prevent and resolve loans of small and medium-sized enterprises that are in default, and centralised resolution of existing defaults.
- Guaranteeing supplies and stabilising the prices of commodities and raw materials. Using methods including existing stores to strengthen supply-demand adjustments, and expedite price stabilisation.
- Strengthening guarantees for factors of production.