China’s central bank and forex authority have issued a new directive outlining financial support for those parts of the economy affected by COVID-related restrictions.
On 18 April the People’s Bank of China (PBOC) and the State Administration of Foreign Exchange (SAFE) jointly issued the “Notice on Effectively Performing Financial Services for Pandemic Prevention and Control and Economic and Social Development” (于做好疫情防控和经济社会发展金融服务的通知).
The Notice calls for strengthening financial services for the real economy, with a focus in particular upon helping enterprises adversely affected by COVID-19, expediting the growth of foreign trade, and “smoothing out” domestic economic circulation.
According to the Notice PBOC will make use of both the quantitative and structural aspects of monetary policy to expand financial support for industries, enterprises and demographics affected by COVID.
PBOC said that it will maintain “rationally ample” liquidity, as well as guide financial institutions to expand lending, and “rationally sacrifice profits” to the real economy.
Related measures and requirements will include:
- Increasing when appropriate the re-loan quota to support agriculture and small businesses.
- Making effective use of financial inclusion micro-and-small lending support tools.
- Provide incentive funds based on 1% of the volume of increase in the financial inclusion micro-and-small loan balance of local legal person financial institutions.
- Continuing to roll over the 400 billion yuan re-loan quota originally used to support financial inclusion micro-and-small loans.
- Expediting the channelling of financial resources towards enterprises, industries and regions affected by COVID.