China c.bank to lower corporate funding costs, aid small firms

Credit: REUTERS/THOMAS WHITE

China will keep liquidity reasonably ample and reduce funding costs, especially for small firms, a central bank official said on Tuesday, in a bid to support the slowing economy.

BEIJING, Nov 23 (Reuters) - China will keep liquidity reasonably ample and reduce funding costs, especially for small firms, a central bank official said on Tuesday, in a bid to support the slowing economy.

The central bank will deepen interest rate reforms and improve rate transmission to further lower financing costs, Zou Lan, head of financial markets at the People's Bank of China (PBOC), told a briefing.

His comments come a day after Premier Li Keqiang said authorities needed to avoid a "one-size-fits-all" approach to shoring up economic growth.

Zou said on Monday the PBOC would guide financial institutions to step up lending to the manufacturing sector, small firms and green sectors.

Xu Xiaolan, vice minister of industry and information technology, told the same briefing that small- and medium-size firms face new problems and increased downward pressure.

The government will closely monitor their production and operations, study policy options, and will turn phased preferential policies into long-term policies, Xu said.

China's cabinet said on Monday it would increase financing support for small businesses hurt by soaring raw material prices, power shortages and recent COVID-19 outbreaks.

China's economy faces new downward pressures but authorities should avoid rolling out economic measures in a "campaign-like and aggressive" way, Premier Li said on Monday, according to state media.

The weighted average lending rate for small firms was at 4.94% in October, down 0.14 percentage points from December 2020, Zou said.

Outstanding loans for small firms was at 18.6 trillion yuan ($2.91 trillion) at the end of October, up 26.7% from a year earlier, he added.

China stood pat on its benchmark lending rates for corporate and household loans for a 19th month at its November fixing on Monday, in line with market expectations.

($1 = 6.3851 Chinese yuan)

(Reporting by Kevin Yao; Editing by Sam Holmes)

((kevin.yao@thomsonreuters.com; +8610 5669 2128;))

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