BEIJING (Reuters) – China’s banking and insurance regulator is calling for banks to meet credit demand from private firms “to the greatest possible extent”, a top journal of China’s ruling Communist Party said.
Chinese banks are wary of a fresh spike in bad loans after years of pressure from regulators to reduce riskier lending and an some entrepreneurs have begun questioning the effectiveness of Beijing’s policies.
“(Banks) should satisfy the effective credit demand from enterprises to the maximum extent,” the party committee of the regulator wrote in the ideological journal Qiushi, or Seeking Truth, on Saturday.
Banks should not apply a one-size-fits-all approach to withholding loans, while providing financing to private enterprises with low debt ratios and robust risk controls, Qiushi said, adding that lenders should help firms whose liquidity has been hit by trade tensions with the United States.
There has been speculation that Beijing is giving less importance to the private sector, which accounts for 60 percent of China’s gross domestic product and 80 percent of urban jobs.
Chinese president Xi Jinping said such comments were “wrong” and “one-sided” and regulators have since pledged more funding support to cash strapped private firms.
However, corporate credit demand remained subdued as loans tumbled to 150.3 billion yuan in October from 677.2 billion yuan a month earlier.
China’s policymakers are expected to further loosen fiscal and monetary conditions in coming months if domestic and external demand deteriorate further, with economists largely expecting conditions to get worse before they get better.
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Source: Investing.com
