Beijing vows to help companies cut funding costs as economy cools
The central government has promised to help companies lower their funding costs by giving banks more flexibility to lend and allowing loss-making companies to list in stock markets, among other measures.
The central government has promised to help companies lower their funding costs by giving banks more flexibility to lend and allowing loss-making companies to list in stock markets, among other measures.
The State Council said yesterday after a weekly meeting that it would also find new ways to use the mainland's US$3.9 trillion foreign-exchange reserves to help firms expand abroad.
Banks would be given more flexibility when meeting the loan-deposit rule, which requires them to lend no more than 75 per cent of their deposits, the government said in an online statement after the cabinet meeting.
The assessment criteria of banks' performances would also be revised to prevent them from charging "unreasonably high interest rates" as well as "loving the big and hating the small" when deciding whom to lend to.
Plans to unveil simplified rules for new initial public offerings would be accelerated, and a requirement for companies to have been profitable for a sustained period of time before they list would be removed.
No further details were given.
Hurt by flagging growth from manufacturing to investment and domestic spending, the mainland economy experienced its worst slowdown since the 2008-09 global financial crisis in the September quarter, when growth eased to 7.3 per cent. Beijing's leaders have set an indicative growth target of about 7.5 per cent for this year.
Underscoring the challenges, the National Development and Reform Commission warned yesterday that the economy faced increasing downward pressure next year while the mainland pushed forward with reforms to keep growth stable.
Xu Shaoshi, the head of the commission, made the comments during an internal meeting, according to a statement on its website.
The cooling economy has compounded the difficulties of mainland companies, which are already battling rising labour costs. Smaller companies have also complained of climbing funding costs.
The government said in August that the financing costs faced by factories leapt 16.5 per cent on a yearly basis in the first half of this year, with interest payments climbing 11.2 per cent.
