BEIJING, May 31 (ABC): As the fallout of COVID-19 continues to weigh on the world’s second-largest economy, China’s banking sector has ratcheted up support measures to boost the economy, channeling funds to where they are needed the most.
In times of increasing downward pressure, financial institutions, as a supporting force for growth, are expected to step in and energize firms while implementing pro-growth measures, analysts said.
RELIEF POLICIES RENEWED
At a State Council executive meeting earlier this month, China’s policymakers announced a new package of 33 measures to stimulate growth, urging lenders to extend stronger credit support to market entities undergoing great difficulties.
China’s market entities, totaling 158 million as of the end of last month and major job creators for the economy, have been under greater strains amid economic pressure at home and mounting challenges abroad.
The meeting decided to double the scale of the support facility for inclusive loans to micro and small businesses, as well as its share of the increase in the loan balance.
Banks are encouraged to defer, within this year, principal and interest repayments on loans made to micro, small and medium-sized enterprises and self-employed households, truck loans, and home loans and consumer loans owed by individuals facing temporary difficulties, according to the meeting.
These new preferential policies represent banks’ continued credit support to smaller enterprises in the country. To assist businesses to survive and thrive, China’s banks have been fine-tuning measures to direct more funds to smaller firms since the start of this year.
Official data showed that outstanding loans to small and micro businesses nationwide stood at 53.54 trillion yuan (about 8 trillion U.S. dollars) as of the end of April, of which inclusive loans to small and micro firms reached 20.5 trillion yuan, up 21.64 percent from a year ago.
As part of efforts to ease the burden on businesses, China has also adopted value-added tax (VAT) credit refunds, which have seen solid implementation so far.
In the COVID-hit metropolis Shanghai, for instance, the People’s Bank of China Shanghai Head Office has issued a guideline, requiring stronger coordination across fiscal and taxation organs to ensure that market entities get their share of VAT credit refunds without impediments and delays.
