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China instructs banks, insurers to up financing support for real economy

Xinhua | Updated: 2018-08-13 14:42
Chinese 100 yuan banknotes are seen in a counting machine at a bank in Beijing, China, March 30, 2016. [Photo/Agencies]

BEIJING - The China Banking and Insurance Regulatory Commission (CBIRC) said Saturday that it has encouraged banks and insurance companies to increase funding to meet the financing demand of the real economy.

Preliminary data showed that newly made yuan loans in July stood at 1.45 trillion yuan ($212 billion), up 623.7 billion yuan from the same period last year, the commission said in a statement on its website.

"[The commission] instructed banking and insurance institutions to have an accurate understanding of the relations between promoting economic growth and containing risks," the statement said.

It also urged the institutions to make full use of current favorable conditions including abundant liquidity and declining financing costs to raise their financing support for the real economy.

Banks have been instructed to ensure financing demand of projects under construction and raise funding support for weak areas in the country's infrastructure, the statement read.

Among the new yuan loans in July, lending to the infrastructure sector rose from June to 172.4 billion yuan.

The commission has also encouraged banks to write off their bad loans to create more room for increasing lending.

In the first half, commercial banks wrote off bad loans of about 800 billion yuan, up 166.5 billion yuan from the same period last year.

The CBIRC has supervised banks to retain more profits to consolidate their core capital, and supported banks to replenish their capital base through multiple channels, the statement said.

The statement added that efforts were also made to improve the incentive mechanism to make banking institutions more willing to serve the real economy, including increasing the tolerance for bad loans to small- and micro-sized enterprises.

In the first seven months of this year, bank lending to small and micro firms rose 1.6 trillion yuan, faster than the increase in overall bank loans during the period.

In the future, the commission will continue to uphold the underlying principle of pursuing progress while ensuring stability and further raise the quality and efficiency for financial institutions to serve the real economy, the statement said.

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