Li: Mix of policies set to spur economy

China is ready to roll out a mix of fiscal and financing policies to better cope with challenges and spur the economy, the State Council's executive meeting chaired by Premier Li Keqiang decided on Tuesday. Policies will include advance allocation of additional local government bonds and ramping up of financial support for micro, small and medium-sized enterprises, the meeting said.

The meeting underscored the need to increase special local government bonds and expand effective investment in areas of weakness. On top of this year's local government bond quota already made available, additions to the quota will be expeditiously allocated in advance in accordance with set procedures.

Such funding will be directed to where the projects are, prioritizing regions with key projects, low risks and the prospect of quickly boosting effective investment that will be channeled to expediting those projects and livelihood programs.

"It is essential to make well-calibrated arrangements in advance to keep the projects under construction going, and launch some new projects in light of real needs," Li said.

Inclusive financing support to micro, small and medium-sized enterprises will be intensified.

For small and medium-sized banks, relending and rediscount quotas will be increased by 1 trillion yuan ($141 billion). Targeted cuts in the required reserve ratio will be further implemented to encourage these banks to funnel all the newly obtained funding from loans at concessional rates to micro, small and medium-sized enterprises. Agricultural and foreign trade and sectors heavily affected by the COVID-19 outbreak will get greater loan support.

"Smaller businesses have been hit the hardest by the outbreak. Their restarting operations affects the entire industrial chain and is vitally important for keeping employment stable. The government must promptly roll out support measures that benefit them all," Li said. Financial institutions will be supported in issuing 300 billion yuan of financial bonds to be used as loans exclusively targeting small firms.

The meeting called for an increase of 1 trillion yuan over the previous year in net financing from corporate credit-backed bonds to expand low-cost financing channels for private and smaller businesses.

"The small and medium banks must meet the eligibility criteria when accessing the relending quota," Li said.

The meeting also underscored the pressing need to intensify support for low-income groups, especially those living in difficult circumstances.