Beijing reaffirms commitment to credit support to boost real economy

Beijing has reaffirmed its commitment to credit support for the real economy amid concerns over slowing output growth and rising risk in the mainland's financial sector.

At a meeting of the State Council chaired by Premier Li Keqiang yesterday, the cabinet unveiled a raft of initiatives to spur economic restructuring and maintain balanced growth. The economy grew at a slower-than-expected pace in the first quarter.

The State Council said it would guide credit flows into the real economy while curbing the influx of money into sectors struggling with overcapacity.

The cabinet also promised to give small businesses and borrowers in the agricultural sector preferential access to financing.

While maintaining a prudent monetary policy, it said it would offer financing support to spur consumption in areas such as schooling, tourism and affordable housing as well as purchases of big-ticket household goods.

Credit growth on the mainland, particularly loans from "shadow banks", has been rapid this year, but much of the money has failed to reach the real economy, raising concerns among analysts over mounting debts at banks and a lack of investment to help pull the country out of the slowdown in growth.