PBOC Adviser Outlines Strategy To Boost Lending To Small Companies

Forex News

According to Bank of China’s adviser, the China needs to coordinate its economic policies and regulations better in order to increase lending to small companies. The government keeps seeking ways to ramp up the growth and avoid crisis on rising trade tension with the US. Ma Jun (policy adviser to PBOC) told: "The main focus will be on strengthening the overall coordination of policies", referring to cabinet's Financial Stability and Development Commission, led by Vice Premier Liu He.

China's small and private companies now have to deal with severe financing difficulties as banks see a credit quality threat. Tighter official scrutiny of local government investment projects has subdued their demand for loans.

According to Ma Jun, People’s Bank of China needs to reduce the credit impact of its multi-year campaign as well as keep boosting its targeted Reserve Requirements Ratios reductions and the MPA mechanism to favor smaller firms. In the long term, the Central Bank should begin a new benchmark policy rate as the intermediate policy target.