© Reuters. FILE PHOTO: Paramilitary police officers stand guard in front of the headquarters of the People’s Bank of China, the central bank (PBOC), in Beijing, China September 30, 2022. REUTERS/Tingshu Wang/File Photo
BEIJING (Reuters) – China’s central bank said on Sunday it will roll over three lending tools to increase support for targeted sectors of the economy.
The People’s Bank of China will roll over a lending tool for supporting carbon emission reduction to the end of 2024, and extend a relending tool for promoting the clean use of coal to the end of 2023, the bank said in a statement on its website.
The central bank will also extend a relending tool for the transport and logistics sector to June 2023, it said.
Some foreign financial institutions will be included in the scope of the carbon reduction tool, the central bank said.
The move to extend the lending tools will help “precisely and effectively implement the prudent monetary policy, guide financial institutions to increase support for green development and other areas”, the central bank said.
Since 2020, when the world’s second-largest economy was first jolted by the coronavirus, the central bank has expanded its arsenal of structural policy tools, including relending and rediscount facilities and other low-cost loans.
Outstanding loans made via structural tools amounted to nearly 6.45 trillion yuan ($950.98 billion) at the end of 2022, central bank data showed.
The central bank is poised to ramp up targeted support for troubled sectors through its structural policy tools, according to policy sources and analysts.
($1 = 6.7825 renminbi)
The People’s Bank of China is aiming to roll over existing lending tools to promote sustained economic growth in 2019. The plans announced by the central bank include expanding the use of a targeted medium-term lending program, renewing a loan structure for small and medium-sized enterprises, and launching a yuan-denominated bond market.
The intended effect of the central bank’s initiatives is to provide a reliable source of credit to companies and households, while also making long-term investments more attractive. By doing so, China hopes to further stabilize the economy.
The targeted medium-term lending program was first introduced in 2014 to support the development of key sectors and reduce the financial burden of companies. By rolling it over, the program will provide an additional avenue of support for policy banks, commercial banks, and small and medium-sized enterprises. The new plan also includes renewed loans to small and medium-sized enterprises, resulting in a further reduction of their financing costs and strengthening of the existing credit structures.
The move to launch a yuan-denominated bond market is expected to provide investors a more stable and reliable investment option. Investors in the bond market will be able to access a variety of debt securities, giving them the potential to earn higher returns compared to traditional money market instruments.
These moves by the People’s Bank of China demonstrate a clear commitment to maintaining and promoting growth in China’s economy. The hope is that by providing lenders and investors additional options to access funding and make investments, the overall economy will benefit and the standard of living will improve. It’s expected China’s economy will continue to expand in 2019 and beyond, due in large part to these lending tools.