China's Central Bank, Other Sever Gov't Departments Issue Notice to Promote Private Economy
Xu Wei
DATE:  Nov 27 2023
/ SOURCE:  Yicai
China's Central Bank, Other Sever Gov't Departments Issue Notice to Promote Private Economy China's Central Bank, Other Sever Gov't Departments Issue Notice to Promote Private Economy

(Yicai) Nov. 27 -- The People's Bank of China and seven other departments have issued a notice to support the development of the private economy with monetary policy tools, credits, bonds and equity financing, and foreign exchange.

The announcement, jointly drafted by the PBOC, State Administration of Financial Regulation, China Securities Regulatory Commission, State Administration of Foreign Exchange, National Development and Reform Commission, Ministry of Industry and Information Technology, Ministry of Finance, and All-China Federation of Industry and Commerce, was published on the central bank's website today.

In terms of monetary policy tools, the notice said that it is necessary to continue to use a variety of monetary policy tools to support financial institutions in increasing credit to private enterprises in key areas and reducing the financing costs of micro and small companies.

In terms of credit, financial institutions should increase financial support for private enterprises and gradually raise the proportion of loans to private enterprises, support the investment in technological transformation and project construction of private firms, meet the reasonable financial needs of micro, small, and medium private companies, and optimize their credit structure.

Moreover, financial institutions should also reasonably raise the tolerance of non-performing loans of private enterprises and establish and improve the due diligence exemption mechanism for loans of private companies.

The notice also calls for unblocking the bond financing channels for private enterprises. Regulators should support private firms in registering and issuing various bonds, including science and technology innovation bonds and green bonds, and issuing asset-backed securities, and increase investment in private enterprise bonds.

Regulators should also encourage and guide commercial banks, insurance companies, pensions and public funds, and other institutional investors to allocate private enterprise bonds.

The notice also noted that it is necessary to give better play to the role of the multi-level capital market and expand the scale of equity financing of high-quality private enterprises.

In addition, the notice includes policies such as vigorously supporting the issuance, listing, and refinancing of private enterprises. Regulators should promote qualified private enterprises to go public overseas, insurance, trust, and other institutions and asset management products to invest in key construction projects of private companies, cultivate angel investment, venture capital, and other early-stage investment, and increase investment in micro, small, and medium startups.

The notice also proposes corresponding measures in terms of foreign exchange facilitation policies.

Editor: Futura Costaglione

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Keywords:   PBOC,private economy