These Are the 23 Measures China Just Unveiled to Save the Economy

China’s central bank rolled almost two dozen measures and promises intended to boost lending and support industries that have been battered by recent Covid outbreaks and lockdowns.

The 23 steps include everything from lending guidance for banks and promises to make it easier for companies to expand the cross-border use of the yuan, to general pledges for more credit or other financial support. The measures were outlined in a document published Monday by the People’s Bank of China and its foreign exchange regulator. They echoed a similar list of policies released in February 2020, at the height of the initial Covid outbreak.

Here are the specific measures in the document.

Covid-Related Policies

  • A promise to use monetary policy tools to provide sufficient liquidity, guide banks to expand loan extension and transfer profits to the real economy appropriately
    A pledge to expand the relending quota for small and agricultural businesses, and to guide banks to increase support for industries suffering from a temporary hit to business, including catering, hospitality, retail and tourism
  • The central bank will reward banks with funds equivalent to 1% of their newly increased loans for small and micro firms through mid-2023, and roll over an existing 400 billion yuan ($62.8 billion) relending quota for inclusive finance
  • Banks should defer mortgage payments or extend mortgages for people in Covid-related quarantine arrangements, along with those who temporarily lost income due to the pandemic; banks should also provide more business loans to workers with “flexible employment,” such as taxi drivers, online shop owners and truck drivers

Financial Support

  • A pledge to increase credit support for spring planting, as well as the storage and processing of grains and production of major crops, such as soybeans
  • The central bank will use its relending program to support the safe production of coal, and will meet the demand of power-generating firms to buy and store coal, as a way to ensure stable energy supply
  • It will support the ability of banks to extend loans to logistics firms and truck drivers, and for them to provide emergency loans to support airlines and airports
  • Through the relending program, the central bank will guide banks to support companies’ research and development
  • Policy banks should step up financing support for major investment projects, and all banks should proactively seek out projects, including those focused on “new infrastructure,” such as data centers. Banks should also buy government bonds to support front-loaded infrastructure investments, and meet the reasonable needs of local government financing vehicles
  • The central bank will encourage banks to build long-term partnerships with private firms and enhance their share of new corporate loans
  • Cities should set differentiated property credit policies and appropriately set requirements for down-payments and mortgage rates; banks, meanwhile, should step up support for quality property projects and lend more to construction firms
  • Fintech firms should lower fees and interest rates
  • The central bank will increase financing support for sectors including elderly care and tourism, as well as green energy and rural sectors

Foreign Exchange

  • The central bank will test more convenient yuan settlements in trade and investment
  • It will make it easier for companies to borrow from overseas
  • It will encourage companies to use more yuan to settle cross-border trade, and enhance foreign exchange derivatives so firms can better prevent risks
  • It will further digitize cross-border bank settlement and payment services
  • It will step up insurance support for small exporters and importers
  • It will enhance procedures and standards to make it more convenient for foreign investors to invest in Chinese securities markets

Other Measures

  • The central bank will strengthen the leadership role the Communist Party plays in carrying out policy
  • Banks should make autonomous decisions and shoulder their own risks; the central bank will also guide banks and companies to prevent moral hazards and enhance compliance with rules

Continued Policies

  • The central bank will expedite the issuance of bonds for companies impacted by the pandemic by simplifying procedures and reasonably relaxing information disclosure requirements
  • It will ensure cash supply, along with the operation of a digital payment system; banks can approve loans remotely using video conference; the central bank will also ensure that tax rebates are paid to companies

Source: Bloomberg

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