China adjusts key parameter to facilitate cross-border financing

China on March 12 adjusted up a key parameter in its macro-prudential management to allow domestic firms to borrow more foreign debt, an official statement said.

The macro-prudent adjustment parameter, a multiplier that decides the upper limit of outstanding cross-border financing an institution can have, will be set at 1.25 starting on March 12, up from 1 previously, according to a joint statement by the People's Bank of China and the State Administration of Foreign Exchange.

The move is expected to help domestic institutions, especially small and medium-sized enterprises and private firms, raise funds through multiple channels and ease their financing strain so that they can better resume work and production, the statement said.

The scale and structure of China's foreign debt is reasonable at present, and the risk of foreign debt is generally controllable, the statement said, adding that the adjustment will not cause a substantial increase in the scale of foreign debt.