Global EditionASIA 中文双语Français
Business
Home / Business / Finance

Li: Reforms to reduce interest rates

By ZHANG YUE | China Daily | Updated: 2019-08-17 07:17
A clerk counts cash at a bank in Huaibei, Anhui province. [Photo provided to China Daily]

Businesses' financing hurdles taken up during State Council executive meeting 

China will take market-oriented reform measures to ensure that real interest rates will be meaningfully reduced thereby resolving financing hurdles facing businesses, the State Council's executive meeting chaired by Premier Li Keqiang decided on Friday.

"Thanks to the measures taken by various sides since the beginning of this year, real interest rates have been lowered to a certain degree. While borrowing was made less expensive, the difficulty in accessing financing has become more acute," Li said at the meeting.

It was emphasized at the Friday meeting that it is important to keep liquidity reasonably sufficient and use market-oriented reform measures to lower the real interest rate.

Those attending the meeting decided to reform and improve the loan prime rate mechanism, which involves the price of loans banks offer to their best clients. To form an LPR, banks submit their prices by adding certain basis points to the interest rates of funding they receive from the central bank in the open market.

An LPR for above five years will be made available in addition to the current one-year LPR to serve as a pricing reference for new bank lending. The purpose is to catalyze further reductions in real interest rates.

"The lowering of real interest rates should be carried out in an open and transparent manner. There needs to be continuous progress in reducing financing costs to deliver tangible benefits to businesses," Li said.

The meeting pushed for more transparency in financing charges. Financial institutions' charges will be better regulated and intermediate agencies will be urged to cut fees.

A combination of monetary, fiscal and regulatory policies will be implemented to facilitate a greater role by the guarantee system to reduce financing costs facing the real economy in a concrete way. Credit and loan support for enterprises with good credit records and market potential will be enhanced.

"The central bank needs to take a multipronged approach and employ a mixture of tools to ensure meaningful reductions in real interest rates," Li said.

Evaluation and supervision are to be strengthened to guide banks in innovating businesses models and scaling up support for the real economy, easing financing woes facing small and micro businesses.

"We must earnestly address the financing difficulties of micro and small firms. Otherwise, employment may be affected given the large number of these companies," Li said.

Top
BACK TO THE TOP
English
Copyright 1995 - . All rights reserved. The content (including but not limited to text, photo, multimedia information, etc) published in this site belongs to China Daily Information Co (CDIC). Without written authorization from CDIC, such content shall not be republished or used in any form. Note: Browsers with 1024*768 or higher resolution are suggested for this site.
License for publishing multimedia online 0108263

Registration Number: 130349
FOLLOW US