China’s new central bank chief has pledged to channel more financial resources towards the private sector, including bond and debt financing tools for troubled property firms.
Remarks by Pan Gongsheng, governor of the People’s Bank of China (PBOC), suggested Beijing was keen to bolster confidence and private companies at a time when the economy has slowed.
Pan, who met on Thursday with at least eight private firms from the property, aluminium and agribusiness industries, said the bank would roll out guidelines to support private firms.
Responding to some firms’ requests of broadening bond financing channels, Pan said the central bank would expand debt financing tools for them.
The debt financing tools, dubbed “the second arrow” and supported by PBOC refinancing, were launched in 2018.
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PBOC to support local governments
“Supporting the development of private firms is the duty of financial departments. It is also an important part of the supply-side structural reform in the financial sector,” a PBOC statement said, citing Pan.
“Financial institutions should actively create a positive atmosphere to support the development and growth of private firms … and increase willingness to lend.”
China last month unveiled a series of policy measures designed to help private businesses after the sector has been bruised by Covid curbs and a wide-ranging regulatory crackdown that targeted industries from technology to property.
The PBOC will support local governments to take the initiative to clear arrears owed to firms, learn about private firms’ financial needs and respond to their concerns and appeals, according to the statement.
Property firms caught in severe debt crisis
As some private property firms still failed to get out of the woods, the PBOC vowed it would meet reasonable financing demand for them and implement differentiated housing credit policies in a precise manner.
China’s property sector has over the past two years been grappling with a severe debt crisis – initially triggered by government moves to rein in ballooning debt – with many developers defaulting on payments as they struggle to sell apartments and raise funds.
Members of companies that attended the meeting included heads of three property firms Longfor Properties, Midea Real Estate Holding, CIFI’s property firm and dairy giant Yili Group, aluminium products manufacturer China Hongqiao Group, electrical components manufacturer Chint Group, agribusiness firm New Hope and apparel products manufacturer Hongdou.
To revive confidence among private businesses, head of the economic planner also held several meetings with private firms last month to learn about their operation difficulties.
The cabinet last week also asked the public to report obstacles in the private economy growth.
- Reuters with additional editing by Jim Pollard
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