China boosts credit support for micro- and small-sized businesses

The People's Bank of China rolled out plans to provide further funding support for micro- and small-sized businesses as it seeks to encourage local banks to raise lending to such enterprises.

Between 2022 and the end of June 2023, on a quarterly basis, the central bank will provide funds based on 1% of the increase in the balance of micro and small loans of local lenders, according to a Jan. 1 release.

The central bank will also provide a 400 million yuan relending quota on a rolling basis, with the quota to be raised if necessary. Qualified lenders may issue micro and small loans to the central bank for preferential funding support toward helping agricultural and small businesses.

The move will help stabilize enterprises, ensure employment, and promote the stability of the macroeconomic market, the People's Bank of China said.

In March 2021, China urged large commercial banks to grow their lending to small businesses by at least 30% in 2021, as well as to reduce fees on vulnerable borrowers. The central bank later said in July 2021 that banking financial institutions should set deposit rates to stabilize funding costs and maximize loan prime rate reforms toward lowering interest rates for smaller enterprises.

As of Dec. 31, 2021, US$1 was equivalent to 6.35 Chinese yuan.