Chinese Banks Seek to Revive “Effective Demand” from Enterprises

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The official news publication for China’s financial regulatory agencies has highlighted efforts by the banking sector to help spur demand for funds from enterprises.

“Micro-and-small enterprises are a major force for expediting economic growth, expanding urban and rural employment, driving tech innovation and expediting social harmony,” said Financial News in an article entitled “Banks Strive to Revive Effective Demand from Enterprises, Help Consolidate the Foundations for Economic Recovery and Growth” (银行业多点发力提振企业有效需求 助力巩固经济恢复发展基础).

“Following shocks in excess of expectations, China is currently at the most critical point for economic recovery and stabilisation.

“In the first half of the year banking sector financial institutions undertook a series of financial service initiatives to expand the provision of loans to enterprises, with a focus on reviving effective demand.”

Financial News pointed in particular to the “Government Procurement E Loan” (‘政采e贷), provided by big state-owned lender Agricultural Bank of China (ABC), as an example of a Chinese lender helping to support demand for funds from enterprises, in this case by facilitating their access to credit for government projects.

According to the article ABC recently used the E Loan to provide 5 million yuan in funds to Shandong Mingjia Survey and Mapping Co., Ltd. (山东明嘉勘察测绘有限公司) for a government project.

“ABC’s Government Procurement E Loan makes use of the information in tenders and contracts for government procurements to provide suppliers with online financial products,” said an ABC loans officer.

“The products are distinguished by high quotas, low thresholds, interest rate discounts, online handling and simple procedures, providing a new financing channel for micro-and-small enterprises.”

According to Financial News the next step will be for China’s banking sector financial institutions to “continue to focus on addressing the problem of lacklustre demand; strive to expand the intensity of support for the real economy in key areas and weak linkages; expand effective demand for financial services, and enable the momentum of economic growth and recovery to continue.”