[BEIJING] China's central bank said on Wednesday that banks should step up financing support for the farm sector, in the latest bid to support the vulnerable sector and the overall economy.
The banking industry should "enhance the availability of financing for the agricultural sector at an affordable cost", the central bank said in a statement.
Chinese policymakers face an uphill battle to channel bank loans into the cash-starved farming sector, which employs almost a third of its 1.4 billion people and produces around 9 per cent of China's GDP, though with pitiful productivity.
The central bank said that outstanding loans to agriculture totalled 23.6 trillion yuan (US$3.8 trillion) at the end of 2014, accounting for 28.1 per cent of the total bank loans.
Farm loans rose an annual 13 per cent last year, 0.7 percentage point higher than the rise in overall loans, it said.
Farm loans made by small-sized banks, including rural commercial banks and village banks, jumped 26 per cent last year, while such loans granted by large-sized banks, including big state-owned lenders, rose 11.5 per cent, it said.
Bank loans to agriculture rose an annal average of 21.7 per cent between 2007 and 2014, helping ensure grain harvests and increases in rural incomes, the central bank said.
The central bank has been cutting interest rates and bank reserve requirements - including deeper reductions for rural lenders, in a bid to support the slowing economy.
Weighed down by a property downturn, factory overcapacity and local debt, growth is expected to slow to a quarter-century low of around 7 per cent this year from 7.4 per cent in 2014, even with expected additional stimulus measures.