(Yicai Global) June 3 -- The two new monetary policy tools the People’s Bank of China unveiled to help micro and small companies do not qualify as quantitative easing, according to the central bank’s vice governor.

The measures are “special regulatory policy arrangements during a special period,” Pan Gongsheng said at a press briefing yesterday in response to a question from Yicai Global. They are a short-term, temporary policy to help companies get back to work, he added.

The PBOC revealed its new tools on June 1 to provide more financial services to smaller companies. One pushes back deadlines for loan principal and interests to March 31 next year, and compensates lenders’ lost interest through CNY40 billion (USD5.6 billion) worth of interest rate swaps. The second will see the PBOC spend CNY400 billion on 40 percent of unsecured loans issued to smaller borrowers from small and mid-sized banks, with lenders repaying the central bank a year later while keeping the interest -- and risk of default -- themselves.

Both tools are market oriented, according to Guo Kai, vice director of PBOC’s monetary policy department. Commercial lenders get the returns on their loans and still bear the risk, which makes sure they properly assess potential borrowers and manage their loans effectively, he added.

The Covid-19 outbreak had a stronger impact on China’s society and economy than most people expected, Pan continued, saying this meant it has taken longer than foreseen to resume production and made life tougher for enterprises.

Fixing this requires greater policy support, he said. Monetary and credit policies must be more precise when dealing with the unique hardships of this special time period, and the PBOC took this into account when designing many of the policies it brought in this year. China still has normalized monetary and credit policies compared with other developed economies, and there is still space for more monetary policy tools, Pan added.

Editors: Tang Shihua, James Boynton