BEIJING: China has strengthened financial support measures to promote the robust growth of the private economy, with expanding financing channels for private enterprises high on its work agenda. Experts said the measures will help optimize the allocation of financial resources, shore up market expectations and help sustain the momentum of economic recovery.
The People’s Bank of China, the country’s central bank, along with seven departments, rolled out the 25 steps in late November to better underpin the development of the private economy. Many private businesses across various sectors greatly contribute to tax revenue, gross domestic product, technological innovation and job creation, which makes the private economy a pillar of China’s economy. Private enterprises have also become a significant force in the country’s A-share market, with 3,368 nonfinancial listed companies. Given their sizable scale, there is still substantial room for improvement in terms of bank lending to them, said Zhang Jun, chief economist at China Galaxy Securities.
The total amount of loans to all 5,182 nonfinancial listed companies in the A-share market was roughly 17.95 trillion yuan ($2.5 trillion) at the end of September. By comparison, loans to private listed firms came in at 4.39 trillion yuan, or 24 percent of the total, Zhang added. The measures also outlined annual targets for financial institutions to provide services for private enterprises. The weighting given to such services in performance-based assessments was increased in order to channel greater financial support to them.
By strengthening financial support and addressing the structural imbalances in granting loans, China aims to promote the sustainable growth of the private sector and foster a thriving entrepreneurial ecosystem, said Zhang Wenlang, chief macroeconomic analyst with investment bank China International Capital Corp. –The Daily Mail-China Daily news exchange item
