More financial support urged for small firms

China will adopt market-based measures to double down on financial support for micro, small and medium-sized enterprises to support market players and cushion the new downward economic pressure, a State Council Executive Meeting chaired by Premier Li Keqiang decided on Wednesday.

The meeting noted the importance of acting on the guiding principles adopted at the recent Central Economic Work Conference, putting economic development front and center and prioritizing stable performance while pursuing progress.

"MSMEs and the self-employed are facing great difficulties. In the first half of next year, the impact of commodity price rises will be felt by downstream enterprises and add to their pressure. We need to take multipronged measures to help smaller businesses and the self-employed to get through this difficult period," Li said.

The meeting decided to replace the inclusive loan repayment extension support tool for micro and small enterprises with inclusive loans for them. From the beginning of next year until the end of June 2023, the People's Bank of China, the country's central bank, will provide funds to local banks that issue inclusive loans to micro and small enterprises and the self-employed equivalent to 1 percent of the increase in their loan balance, to encourage them to issue more such loans.

From next year, inclusive credit loans to micro and small enterprises, which are designed to improve such enterprises' access to financial services, will be incorporated into the relending program for agriculture and small enterprises. The 400 billion yuan ($62.8 billion) relending quota previously designated for micro and small enterprises' inclusive credit loans can be rolled over, and can be expanded if needed. Qualified local banks making inclusive credit loans to the enterprises can apply to the People's Bank of China for low-cost relending financial support.

"These are relief policies for businesses. We must get them started fast, make sure they're easy to do, and deliver real results," Li said.

The meeting emphasized that an integrated platform network for financing credit services will be put in place at the national level, with a focus on financing service for micro, small and medium-sized enterprises. On the premise of legal compliance and data security, information regarding business registration, administrative penalties, court judgments and enforcement, tax payments and social insurance contributions will be shared, to help banks raise their capacity to serve the enterprises.

Regulations will be improved concerning the evaluation of financial institutions' performance on issuing of loans to micro, small and medium-sized enterprises, and exemption of liability when due responsibilities are fulfilled. Financial institutions will be supported in issuing special financial bonds for micro and small enterprises. The size of government financing guarantees targeting the enterprises will be expanded and the cost lowered.