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China to set up 60 billion yuan fund to boost smaller companies

China's yuan shot higher in offshore markets on Thursday on suspected intervention by Chinese state banks, putting the offshore rate on track for its biggest daily gain on record.

[BEIJING] China will establish a 60 billion yuan (US$9.4 billion) fund to finance small and medium-sized companies as a means to boost innovation and employment.

The central government will contribute a quarter of the sum, with the rest coming from investments from private and state-owned companies, financial institutions and local governments, the State Council said in a statement Tuesday.

The fund will focus on supporting start-up companies and will use market-driven methods, according to the statement from a meeting chaired by Premier Li Keqiang.

The State Council also cut capital requirements for some fixed-asset investment projects, the statement said.

China is on track to grow at its slowest pace in a quarter- century this year as it shifts its economy more toward consumption and services and away from investment and manufacturing. An official gauge of factory activity released Tuesday fell to its lowest level in three years as recent monetary easing failed to revive old growth drivers.

Capital requirements for projects involving airports, shipping and ports will be cut to 25 per cent from 30 per cent, according to the statement. Railway, road and urban rail transit projects will have a 20 per cent capital requirement, down from 25 per cent.

Industries with overcapacity including steel, cement and coke will continue to face stricter capital requirements of 30 per cent to 40 per cent, the statement said.


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