China will deepen its regional financial reforms, using various policy tools to lower corporate funding costs, especially for small firms, Chen Yulu, a vice governor of the People’s Bank of China, said on Monday.
Chinese policymakers have pledged to maintain support for the slowing economy and prod banks to lend more to small and private firms that are vital for growth and employment.
“We will use a variety of tools and explore effective ways to reduce financing costs of enterprises, especially for small, private firms,” Chen told reporters at a briefing.
China has been experimenting with several regional reform schemes, including one on supporting small firms in Zhejiang and Henan, a scheme on green financing in provinces including Zhejiang, Guangdong and Guizhou, the central bank said.
Other schemes aim to promote financing support for the Guangdong-Hong Kong-Macau Greater Bay Area and other key regional development plans, and a pilot on enhancing the yuan’s convertibility in Shanghai’s free trade zone, it said.
Efforts to deal with financial risks in Wenzhou in the eastern province of Zhejiang have led to a decline in the city’s non-performing loan ratio to 1.14% in the first quarter from 4.69% in 2019, the central bank said.
Wenzhou, known as China’s entrepreneurial hub, had made an effort to dispose of bad loans, control risks and managed risky firms’ mutual guarantees.
“We should summarize good experiences and practices in the pilot areas, and accelerate the expansion of replicable experiences to a wider scope,” Chen said.
“At the same time, we should pay more attention to preventing and defusing regional financial risks.”
China will further open its financial industry and financial markets in a prudent way, Huo Yingli, an official with the central bank, told the same briefing.
China also will enhance the yuan’s convertibility on the capital account, she said.