China unveils more funding support for private firms

[BEIJING] China's Cabinet has unveiled more financial support for private and small firms, which are vital for creating jobs, state radio said on Friday.

The central bank has promised targeted measures to help cash-starved private firms, which account for 60 per cent of China's gross domestic product and 80 per cent of urban jobs.

"The next step is to increase support for private and small enterprises, so that state-owned enterprises, private enterprises and other enterprises will be treated equally," state radio quoted the Cabinet saying, at a regular meeting.

China's major commercial banks should lower their average lending rate in the fourth quarter by 1 percentage point for small firms from the first quarter, it was quoted as saying.

China will crack down on banks' abrupt withdrawal of loans from small firms, which will be encouraged to tap bond and equity financing, state radio said.

Loans for small firms with a credit line of 10 million yuan (S$1.98 million) or less will be included in collateral for the central bank's medium-term lending facility (MLF), it said. Previously, the upper limit was 5 million yuan.

The government will also force large enterprises to repay debt to private firms, it added.

REUTERS