The State Council has issued a new directive calling for further market-based reforms of China’s interest rate regime and reductions to borrowing costs for businesses and households just following the 20th National Chinese Communist Party (CCP) Congress.
On 26 October the State Council issued the “10th National Work Division Plan for Key Missions of the Teleconference on the Deepening of the “Delegation of Management and Service” Reforms.'” (第十次全国深化“放管服”改革电视电话会议重点任务分工方案).
The Plan outlines a range of key financial reforms, chief amongst them “continuing to unleash loan market quotation interest rate reforms and transmission effects” and “reducing the cost of enterprise financing and personal consumer loans.”
“[We must] continue to deepen interest rate marketisation reforms, employ the role of market-based deposit rate adjustments, unleash the effects of reforms to the loan rate quotation interest rate formation mechanism, and expedite reductions to enterprise financing and personal consumer loan costs,” the Plan said.
The Plan also called for 21 nationwide banks in China to “guide commercial banks in expanding the extension of medium and long-term loans to provide adequate financing for the upgrade and improvement of capital equipment.”