Chinese authorities are doing everything in their power to avoid doing what they must as the economy tanks. The PBOC:
Covid-Related Policies
- A promise to use monetary policy tools to provide sufficient liquidity, guide banks to expand loan extension and transfer profits to the real economy appropriately
- A pledge to expand the relending quota for small and agricultural businesses, and to guide banks to increase support for industries suffering from a temporary hit to business, including catering, hospitality, retail and tourism
- The central bank will reward banks with funds equivalent to 1% of their newly increased loans for small and micro firms through mid-2023, and roll over an existing 400 billion yuan ($62.8 billion) relending quota for inclusive finance
- Banks should defer mortgage payments or extend mortgages for people in Covid-related quarantine arrangements, along with those who temporarily lost income due to the pandemic; banks should also provide more business loans to workers with “flexible employment,” such as taxi drivers, online shop owners and truck drivers
Financial Support
- A pledge to increase credit support for spring planting, as well as the storage and processing of grains and production of major crops, such as soybeans
- The central bank will use its relending program to support the safe production of coal, and will meet the demand of power-generating firms to buy and store coal, as a way to ensure stable energy supply
- It will support the ability of banks to extend loans to logistics firms and truck drivers, and for them to provide emergency loans to support airlines and airports
- Through the relending program, the central bank will guide banks to support companies’ research and development
- Policy banks should step up financing support for major investment projects, and all banks should proactively seek out projects, including those focused on “new infrastructure,” such as data centers. Banks should also buy government bonds to support front-loaded infrastructure investments, and meet the reasonable needs of local government financing vehicles
- The central bank will encourage banks to build long-term partnerships with private firms and enhance their share of new corporate loans
- Cities should set differentiated property credit policies and appropriately set requirements for down-payments and mortgage rates; banks, meanwhile, should step up support for quality property projects and lend more to construction firms
- Fintech firms should lower fees and interest rates
- The central bank will increase financing support for sectors including elderly care and tourism, as well as green energy and rural sectors
Foreign Exchange
