China to expand lending to small businesses and poor students
What’s new: China’s central bank will add 300 billion yuan ($ 46.4 billion) to the on-lending quotas to help banks offer loans to small and medium-sized businesses and the self-employed.
The move is part of the central government’s broader measures to keep market entities and employment stable and support economic growth, according to a meeting of the State Council chaired by Premier Li Keqiang.
The firm has also decided to step up aid to students from poor families through a national student loan policy. From the fall semester, the maximum annual loan amount for undergraduates will be increased by 50%, from 8,000 yuan to 12,000 yuan, and 33.3% for graduate students from 12,000 yuan to 16,000 yuan. Interest on loans will be fully subsidized by the government while students are in school, and banks offering student loans will be compensated.
The background: China’s recovery is showing signs of slowing, and analysts express concern that recent measures to address local outbreaks of the delta variant of the coronavirus are dealing a further blow to economic activity, especially spending. offline because consumers avoid going to stores.
Nomura International (Hong Kong) Ltd. lowered its forecast for Chinese GDP growth year-on-year to 5.1 percent from 6.4 percent for the third quarter and 4.4 percent from 5.3 percent for the fourth. Goldman Sachs Group Inc. reduced its growth projection for the year 2021 to 8.3%, from 8.6%.
On-lending and rediscounting are two channels through which the central bank injects liquidity into the financial system. The on-lending program targets small urban commercial banks, rural commercial banks, rural cooperative banks and village banks which must issue a certain minimum proportion of loans to small and micro-enterprises.
Under the national restitution program, banks can borrow central bank funds at an annual interest rate of 2.25%, below the policy rate of 2.95%, under an average one-year loan facility.
Quick Takes are condensed versions of stories related to China for quick news that you can use. To read the full story in Chinese, click here.
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