(Yicai Global) Nov. 27 -- China's eastern Anhui province will establish special funds worth over USD1.4 billion to lower companies' borrowing costs and give away money to influential firms to encourage more of them to go public. 

The finance department of Anhui province proposed to set up two funds to provide liquidity for firms, as well as cut taxes, to promote the development of the economy, local newspaper Anhui Daily reported on the sidelines of a press conference held by the bureau. 

The first CNY1 billion (USD127.9 million) fund is targeted for small and medium-sized firms to ease their financing difficulties. The other CNY10 billion (USD1.2 billion) fund seeks to help the already listed firms in their financial distress. These sums equal CNY11 billion (USD1.4 billion) in total. 

The latter fund can for example bail out firms whose shareholders have pledged their equity as loan collateral. China's central government has tightened its rules on risky borrowing this year to tackle shadow banking, and this has caused many firms to resort to stock pledging to secure funds. 

Anhui's local government will also donate up to CNY2 million (USD255,700) to award some new firms on the Anhui Equity Exchange, others that will list on the new tech innovation board, as well as those who complete their debt financing for the first time. Each year, the authority will give three prizes worth up to CNY1 million (USD144,000) to influential firms. 

The cities of Shenyang in Liaoning province, Xi'an in Shaanxi province, Dongguan and Huizhou in Guangdong province have also issued policies to grant subsidies or awards to listed companies with the highest reward reaching CNY10 million.

Editor: Emmi Laine