PBOC Drafts Policy to Give Private Firms More Funding Access

The People’s Bank of China is drafting preliminary policies to give private businesses better access to funding as authorities ramp up efforts to boost economic growth.

(Bloomberg) — The People’s Bank of China is drafting preliminary policies to give private businesses better access to funding as authorities ramp up efforts to boost economic growth.

Central bank leaders and officials from other financial watchdogs met with representatives from more than 10 banks as well as private companies, including property developers and manufacturers, on Wednesday, according to local media reports. 

Pan Gongsheng, governor of the People’s Bank of China, pledged to direct more financial resources to private companies and small and micro-sized enterprises, according to the state-run Securities Times.  

Authorities are pushing banks to boost lending to businesses, with Securities Times quoting Ma Jianyang, a deputy head of the PBOC’s financial market department, as saying they will make it a “clear goal” as they draft the policies that the share of loans to private firms in total lending should continue to rise. Authorities want to ensure the financial support for the sector matches the companies’ contribution to the economy, according to the report.

Financial institutions will be required to set annual goals for serving private companies, which will carry more weight in the review of their performance, Ma said, according to the newspaper. 

Among the regulators at the meeting were the National Administration of Financial Regulation, the China Securities Regulatory Commission, and the State Administration of Foreign Exchange, according to Securities Times.

Wednesday’s meeting was the second time this month that the PBOC has held talks with private companies and banks as it follows up on a pledge by the Communist Party and the government last month to improve the business environment. China is seeking to boost private business sentiment amid a property crisis, soaring youth unemployment, slumping exports, weak consumer spending and deflationary pressure.

Ma also said at the meeting the authorities will ensure private firms have smooth access to funding via sales of bonds, equities and loans, according to a report by local media outlet Cailian. 

A program to support the sector’s bond financing will be expanded and institutional investors, particularly banks, will be encouraged and guided to buy more debt sold by private companies, it quoted Ma as saying. 

Private businesses will also get support to go public or for secondary share offerings, Ma said. Separately, an official with the Shanghai Stock Exchange said at the meeting that it will improve the efficiency of reviews of private firms’ IPO and secondary offering applications, and study more flexible acquisitions and restructuring mechanisms for technology companies, Cailian reported. 

Executives from companies including autoparts maker Wencan Group Co., cable producer Hengtong Group Co., and wind energy equipment manufacturer Titan Wind Energy (Suzhou) Co. spoke at the meeting, according to a report by Chinese media outlet Yicai. Representatives from property developers such as Longfor Group Holdings Ltd, Seazen Holdings, New Hope Group, and space product maker Beijing Interstellar Glory Space Technology Co. also attended the meeting, it said.

More than 10 banks were present, such as Industrial and Commercial Bank of China Ltd., China Merchants Bank Co., and Postal Savings Bank of China Co., the newspaper added.

The PBOC has completed the drafting of the policy and will publish it after consulting further with relevant departments, Yicai said.

–With assistance from Evelyn Yu and Xiao Zibang.

(Update with more details in third paragraph)

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