China’s central bank will by the end of the month issue a first batch of low-cost loans to financial institutions to enable carbon emissions cuts, state-owned Xinhua reported on Tuesday, citing an interview with central bank governor Yi Gang.
The People’s Bank of China (PBOC) in November said it would provide 60% of the loan principal taken out by financial institutions for carbon emission cuts, with a one-year lending rate at 1.75%, without specifying when the lending would be issued.
The measure is in line with China’s broader goal to bring emissions to a peak before 2030 and achieve carbon neutrality by 2060, as well as to shelter the economy from the fallout of the COVID-19 pandemic.
China’s economy, the world’s biggest after the United States, faces the triple pressure of falling demand, supply problems and weakening expectations, Yi said, reiterating previous official comment.
“The macroeconomic market must by stabilised,” he told Xinhua. “In addition, it’s necessary to let shareholders of companies, and local authorities shoulder the responsibility of risk events occurring in the market.”
Yi said the PBOC will keep its monetary policy flexible and appropriate, and liquidity ample.
To further lighten the pressure on business, which in general can obtain corporate loans with an average interest rate of 5%, a record low, Yi said, the PBOC will increase the quota for re-financing to small businesses as necessary.
He also said financial risks were under control and expectations for the property market have improved.
“The structural adjustment of the property market is conducive to the formation of a new development model for country’s real estate, and the healthy development of the whole industry,” Yi said.
• Reuters with additional editing by Jim Pollard
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