Beijing: China on Friday said it will set up a national financing guarantee fund for bank loans to small and medium firms in its latest effort to boost financial support as the world's second-largest economy grapple with a slowdown.
China will speed up development of the financing guarantee industry and deepen reforms in the sector to ease financing difficulties for small and micro-sized business, as well as the agriculture sector, an official statement issued after a Cabinet meeting presided over by Premier Li Keqiang.
Provinces and cities are encouraged to develop a set of government-led financing guarantee institutions to mainly serve small and micro businesses and agricultural development, the statement said.
The institutions are asked to be more tolerant of risks related to the targeted sectors, it said without providing information about the size of the fund.
The string of policies came as the government works to channel funding to the real economy, especially to small and micro businesses as banks usually favour big state-backed giants.
Data from the central bank showed Chinese banks made 948.6 billion yuan (USD 155.5 billion) in new loans to small and micro businesses in the first half of the year, accounting for only 26 per cent of total new loans to corporate borrowers in the same period, state-run Xinhua news agency reported.
On July 19, President Xi Jinping reassured local governments that China's economy still enjoys a promising outlook despite downward growth pressure pegging it around 7 per cent.
The Chinese economy is entering a new stage of slower but more resilient growth, which Xi has called the "new normal".
The International Monetary Fund has said that China's economy will slow down to 6.8 per cent this year followed by 6.3 per cent in 2016 and 6 per cent in 2017.