e-magazine
APEC's New Vision
The Beijing Agenda draws a blueprint for an integrated, innovative and interconnected Asia-Pacific
Current Issue
· Table of Contents
· Editor's Desk
· Previous Issues
· Subscribe to Mag
Subscribe Now >>
Weekly Watch
Expert's View
World
Nation
Business
Finance
Market Watch
Legal-Ease
North American Report
Forum
Government Documents
Expat's Eye
Health
Sci-Tech
Lifestyle
Books
Movies
Backgrounders
Special
Photo Gallery
Blogs
Reader's Service
Learning with
'Beijing Review'
E-mail us
RSS Feeds
PDF Edition
Web-magazine
Reader's Letters
Make Beijing Review your homepage
Hot Links

Market Avenue
eBeijing

The Latest Headlines
The Latest Headlines
UPDATED: November 20, 2014
China Promises Measures to Ease Firms' Financing Burdens
Share

With continued pressure on the Chinese economy, China's State Council pledged a list of measures to ease financing burdens for companies on Wednesday.

After a string of moves to tackle this problem was rolled out in July, high financing costs have eased in some regions, but still remain a prominent bottleneck for businesses, said a statement released after an executive meeting of the State Council, China's cabinet, presided over by Premier Li Keqiang.

More flexibility should be given to the calculation of the loan-to-deposit ratio for financial institutions to better their capability to support small and micro businesses as well as farmers, according to the statement.

Previously the loan-to-deposit ratio ceiling for commercial banks was set at 75 percent. A higher loan-to-deposit ratio is desirable for banks as loans bring profits for them and they can lend more money to clients.

"It is the key to solve the high financing cost problem," Lian Ping, chief economist with the Bank of Communications, told Xinhua.

Relaxing the ratio calculation standard can help reduce operational costs for banks and companies, he said.

China will speed up the growth of private banks and encourage financial institutions to provide multi-faceted financial services to companies through community and cellphone banks. The government also encourages Internet finance companies to provide standardized services to smaller businesses, farmers and the rural economy, said the statement.

"The Chinese banking sector is dominated by state-owned big lenders and their needs are not perfectly in line with small and private firms, who bear the brunt of high financing costs. Changing the landscape of the banking sector is critical to reduce financing costs for the real economy," said Lian.

Performance assessment for Chinese commercial banks should also be improved to curb the tendency of preferring big projects and high loan interest rates, said the State Council.

"The performance assessment of commercial banks should not focus only on high profit growth, as this will add pressure to the operational costs of companies," said Zhang Liqun, a researcher with the Development Research Center of the State Council.

China will also lower the threshold for small and innovative firms to get listed on the stock market, scrapping the requirement that only companies that register continuous years of profits are eligible to be listed, said the statement.

"To help smaller firms get access to direct financing on the stock market is even more important than increasing loans for them, and it is a pioneering arrangement," Zhang said.

The meeting also called for efforts to improve the credit evaluation system for smaller firms, use asset-backed securities, speed up the interest rate liberalization reform, and improve the accountability system in financial institutions.

The new moves came as China's economy expanded at 7.3 percent in the three months through September, down from 7.4 percent for the first half.

(Xinhua News Agency November 19, 2014)



 
Top Story
-Slow Down, Don't Panic
-Target 2020
-Oil Prices on the Decline
-A Shared Path
-A Milestone Gathering
Most Popular
在线翻译
About BEIJINGREVIEW | About beijingreview.com | Rss Feeds | Contact us | Advertising | Subscribe & Service | Make Beijing Review your homepage
Copyright Beijing Review All right reserved