China to bolster cash-hungry private sector
Print Edition
China is encouraging the setting up of private banks and the resumption of initial public offerings as the government continues to bolster the slowing economy by boosting financial support for the cash-hungry private sector.
Village banks, credit companies, financial leasing firms and other small financial institutions are encouraged to set up branches in areas where small businesses are concentrated, the State Council, China’s Cabinet, said in guidelines published on the central government’s website yesterday.
“We will actively develop small-sized financial institutions and open up the channel for private capital to enter the financial sector,” the statement said. “We will encourage private capital to establish private banks which will be responsible for their own risks, as well as financial leasing companies, consumer finance companies and other financial institutions.”
The government is also urging the resumption of IPOs, suspended since November, and the lowering of threshold for the growth-enterprise board, echoing Vice Premier Ma Kai and the securities regulator’s earlier pledge to help small firms raise funds on the stock market.
“We will further amend the system of small and medium enterprise board and growth-enterprise board by improving policies on public offering, pricing, and mergers and acquisitions,” yesterday’s statement said. “We will lower fiscal requirements for innovative companies to go public.”
A spokesperson for the China Securities Regulatory Commission said earlier this month that the regulator is revising regulations on the growth-enterprise board to ease IPO requirements and set up flexible re-financing mechanisms. But he did not provide further details.
The ChiNext Index, which tracks the Nasdaq-style growth-enterprise board, has leapt more than 60 percent so far this year compared with a nearly 10 percent tumble of the CSI 300 Index, the benchmark for blue chips on the Shanghai and Shenzhen exchanges.
The government also reiterated that banks’ credit growth to small enterprises should not be lower than total credit growth, and that the incremental amount should not be below that recorded a year earlier. It is looking to smaller businesses to help stabilize economic growth and employment.
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