BEIJING – The government of the People’s Republic of China has announced a series of action measures to support the country’s private sector, reduce risks, and safeguard the stability of the Chinese economy.
The measures constitute steps to further strengthen the Chinese financial system’s ability to respond to shocks and generate stable growth in the long run.
The measures are aimed at reducing business risk and facilitating investment for smaller enterprises (SMEs) which are facing problems.
According to the official Xinhua News Agency, a key step by the Chinese government is to continue lowering the interest rate (also known as the floor) for both medium- and long-term corporate loans under the banks’ risk-free lending capacity.
According to the central bank, the new deposit and lending rates are expected to be passed on as planned to banks by the end of March.
The action plan also includes stricter monetary and fiscal supervision of SMEs in key growth areas and the reform of state-owned enterprises (SOEs).
“SMEs continue to be facing challenges, including low returns on investments, social responsibility issues, high cost of funds, and the problem of competitive barriers. The relevant government departments should address existing issues of social responsibility and provide more support to the private sector,” said Zhang Xiaohui, vice governor of the People’s Bank of China (PBOC), in the survey report.
“The differentiated information of growth will be used to better study local economic conditions in every town,” Zhang was cited saying.
Reform to encourage more private investment in the resources sector has already been made and will lead to the new form of free economic activities. This will reduce reliance on state investment and debt in the manufacturing sector, including heavy industries.
The survey report did not mention any specific measures to alleviate the social responsibility issue, or simplify or cut down on the challenges facing the industry.
“The market is the key to accelerating innovation and economic development in all areas,” added Zhang.
Other measures include facilitating the exchange rate for some certificates of deposit (CDs), setting up specialized departments to review deals with foreign organizations, strengthening state-owned enterprise supervision, accelerating legislation on intellectual property rights, and further improving stock financing systems.
Other moves on the economic front include protecting and removing barriers to overseas investment and improving access to markets and market regulations.
According to Zhang, the Chinese government is heavily committed to promoting the stability of the Chinese economy, but should look at the long term.
The government’s long-term objective is to improve the efficiency of allocation of resources and social sustainability in the country.
“To achieve this objective, we need to tackle the various challenges of globalization, technological progress, social order, resource waste, problems in the financial sector, so we are pursuing reform, development and development in the long run,” Zhang said.