Financial sector urged to open wider to private firms

The financial sector was encouraged to lower the threshold for private enterprises, especially small and micro-sized companies, according to actions taken at a State Council executive meeting presided over by Premier Li Keqiang on Nov 9.

"To ease financing difficulties of private firms is vital for stabilizing the macro-economic situation and market expectation," the Premier said, adding that more measures should be rolled out to inspire financial institutions to do something, of which the Finance Ministry should take charge.

Although previous efforts made progress in addressing financing difficulties for private and small enterprises, the issue still exists. Solid measures must be put in place to gear up the market and employment.

Private enterprises have a high demand for loans, but they, especially small ones, cannot get loans due to the strict conditions of financial institutions and their reluctance to take risks and responsibility. "With that attitude, how can the financial system run smoothly?" the Premier said.

In the next step, he said, China will offer equal treatment for all types of enterprises, widening financing channels for micro and small firms. Incentives should be given to financial institutions to make their lending to micro and small firms part of the internal performance evaluation. And a clear standard on liability exemption for lenders should be formulated.

At the meeting, major commercial banks were called on to work hard to cut their average lending rate by 1 percentage point in the fourth quarter compared with the first quarter, and unnecessary procedures or surcharges in financing will be removed.

Also discussed at the meeting was how to better leverage government-managed guarantee funds to make more financial resources available to micro and small companies, as well as the agriculture sector.

Supporting agricultural and rural development, as well as small companies, should be the primary business of all government-managed guarantee and re-guarantee institutions, with priority given to micro and small firms, as well as entities engaged in agricultural and rural development with a guarantee volume of up to 5 million yuan per entity.

It was also decided that the State Financing Guaranty Fund should not set its guarantee fee rate higher than provincial institutions.

"Relative departments should be proactive to roll out more tough measures to stimulate the market," the Premier stressed. "The prosperity of small firms is an important buttress for economic development."