Li stresses importance of ‘well-calibrated and more effective policy operations’
China will prolong policies on inclusive loan repayment extension and the credit loan support program for smaller businesses, the State Council executive meeting chaired by Premier Li Keqiang decided on Monday.
These measures are being taken to keep the main economic indicators within an appropriate range, maintain the continuity, stability and sustainability of the policies, spur the vitality of market players and anchor market expectations.
Related departments devised two monetary policy tools this year, in an effort to offer intensified, direct support to the real economy and help tide businesses over difficulties.
Those tools were the loan extension which encourages local banks－urban and rural commercial banks and rural credit cooperatives－to provisionally defer smaller businesses’ inclusive loan repayments with incentives in place, and inclusive credit loans which provide local banks with concessional funding support. The implementation of these policy tools benefited over 3.1 million smaller businesses.
“This year, China’s economy was able to achieve positive growth. This is attributable to financial institutions’ intensified support for micro, small and medium-sized enterprises,” Li said.
“The Central Economic Work Conference has underlined that the necessary support for economic recovery will be sustained, with well-calibrated and more effective policy operations.”
It was decided at the meeting that the provisional deferral policy for both principal repayment and interest payment on smaller businesses’ inclusive loans will continue to be carried out in the first quarter of next year. In addition, loan repayment will be further extended within a proper time frame. Inclusive loans granted to micro and small businesses will be extended as much as possible in line with market principles and based on consultations between enterprises and banks.
Incentives will be put in place for local banks that provide inclusive loans for micro and small enterprises with a deferred repayment period of no less than six months. The incentives will remain at 1 percent of the loan principal.
The meeting also decided that the inclusive credit loan support program will be extended from the end of this year as appropriate. Concessional financial support at 40 percent of the loan principal will continue to be given to eligible local banks for their issuance of inclusive credit loans to micro and small enterprises.