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Financial steps set to boost private firms

By Zhou Lanxu | | Updated: 2023-01-09 00:13
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A worker counts Chinese currency renminbi at a bank in Linyi, East China's Shandong province. [Photo/Xinhua]

China's financial policy will focus on improving the income level of vulnerable groups while stepping up support for private enterprises, in order to spur domestic demand, a central bank official said.

Experts said such efforts are expected to be a key driving force for China's economic recovery, especially as the country's space in monetary policy has expanded, thanks to a stabilizing renminbi exchange rate and expectations of mild domestic inflation.

"Financial policy should actively cooperate with fiscal and social policies on boosting the income of low- and middle-income groups and those severely affected by the pandemic through multiple channels, to meet their basic living needs and increase spending power," said Guo Shuqing, Party secretary of the People's Bank of China, the country's central bank.

More financial products should be created to encourage spending on housing and automobiles, and financial support will be strengthened for services consumption in such areas as education and culture, Guo told Xinhua News Agency on Saturday.

According to Guo, financial services will play a big role in transforming income into consumption and investment, which are at the core of rapid economic recovery and high-quality development.

Experts said Guo's remarks have detailed financial authorities' work agenda of boosting consumption, a key focus of the country's economic work in 2023.

Lou Feipeng, a researcher at Postal Savings Bank of China, said monetary policy is expected to work closely with fiscal policy to boost domestic demand, such as in terms of accommodating local government bond issuances by maintaining reasonable and ample market liquidity.

Monetary policy will also step up support for private enterprises, Guo said, as efforts will be made to support private companies' equity and bond financing, reduce their comprehensive financing costs and promote the healthy development of platform enterprises while increasing support for the services sector.

As economic policies take effect while COVID containment is optimized, China's economy is likely to return to the normal growth track quickly, Guo said, adding that the country has a relatively high potential for growth.

Reflecting international financial markets' confidence in China's economic prospects and price stability, the renminbi has sharply rallied since late last year with rising capital inflows, Guo said.

The country will further simplify the procedures for foreigners to invest in China, he added.

The onshore renminbi advanced by 585 basis points against the US dollar to close at 6.8235 on Saturday, the highest level in more than four months.

Ouyang Shijia contributed to this story.

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