China will smooth the transmission mechanism of monetary policies and further bring down overall financing costs for small and micro-businesses as part of efforts to address their financing difficulties.
The arrangements were made on Thursday at the State Council's executive meeting chaired by Premier Li Keqiang.
Thanks to multi-pronged efforts, by the end of October, the balance of inclusive loans to small and micro businesses increased by 23.3 percent, nearly 11 percentage points higher than the overall loan growth. Interest rates for these firms came down by 0.64 percentage points.
"Keeping employment stable will be our top priority next year. As stable employment largely hinges on small and micro-sized businesses, we must give them more support," Li said.
Guided by the decisions laid down at the Central Economic Work Conference, the meeting decided to bring down overall financing costs of inclusive loans for small and micro businesses by another 0.5 percentage points next year, and make sure that inclusive loans continue to grow faster than overall loans, and that such loans issued by the five major state-owned commercial banks increase by no less than 20 percent.
"While there is fairly sufficient 'water' in the 'pond', private companies, especially small and micro ones, still find it difficult to access affordable financing. It is imperative to take decisive measures to improve the monetary transmission mechanism and bring down real interest rates," Li said.
The meeting urged efforts to smooth the transmission mechanism and overhaul fees in the financing process. Banks will be supported in increasing medium- and long-term loans to the manufacturing industry, and developing credit loans and services that facilitate the roll-over of outstanding loans.
The credit quota for small and micro businesses with loans that are eligible for preferred risk weight formula will be raised from 5 million yuan (about 713,000 U.S. dollars) to 10 million yuan.
The average rate of government financing guarantee and re-guarantee institutions will be brought down to less than 1 percent.
"More research is needed to make breakthroughs," Li said. "When addressing financial risks of small and medium-sized banks, local governments must take their primary responsibilities. At the same time, such efforts must not block the lending channels for small and micro businesses." ■