China pledges more loan support to business to spur economy

CHINA has pledged to boost credit to private companies and extend other funding measures to small firms as policymakers seek ways to shore up confidence and support the recovery.

The nation will expand a bond credit enhancement tool that is backed by financial institutions to all qualified private companies, the National Development and Reform Commission (NDRC) said in a notice posted on Tuesday (Aug 1) on its website.

The measures from the NDRC, China’s top economic planning agency, flesh out promises top leaders including President Xi Jinping have made to promote the growth of the private sector as the nation’s recovery searches for a stronger footing.

Policymakers are focusing on how to rebuild confidence among private firms after the sector was battered by pandemic-related restrictions, as well as regulatory crackdowns on the tech and property sectors. Companies are now holding back from investing or hiring, weighing on an economy that is also dealing with challenges from a property slump, falling exports and soaring youth unemployment.

The NDRC also reiterated support for the healthy development of Internet platform companies and vowed to unveil more investment projects by such companies. A pro-growth pledge singling out those types of firms was included last week in a readout of a meeting by the Politburo, the ruling Communist Party’s top decision-making body.

Authorities have announced other actions in the wake of that Politburo meeting. On Monday, China’s State Council, the country’s cabinet, called on cities to introduce policies to ensure the healthy development of their property markets. Earlier in the day, officials released a broad plan to boost consumption.

SEE ALSO

China’s manufacturing slumps, dragging down Asia factories

China’s July factory activity swings back to contraction: Caixin PMI

DECODING ASIA

Navigate Asia in
a new global order

Get the insights delivered to your inbox.

The slew of policy sweeteners have contributed to a rally in China’s financial markets, where investors are betting that regulators will act swiftly on the Politburo’s promises of support after weeks of disappointment over a lack of execution.

A gauge of Chinese shares traded in Hong Kong has jumped 11.5 per cent since the Politburo meeting, while the mainland’s benchmark CSI 300 Index has gained around 5.7 per cent. BLOOMBERG