(Bloomberg) — China’s central bank announced a spate of measures to support individuals and small businesses as the economy faces headwinds from Covid-led lockdowns.
The People’s Bank of China urged banks to expand lending to people with “flexible employment” such as taxi drivers, online shop-owners and truck drivers, and provide longer-term and cheaper loans to small businesses hit by the outbreak, it said in a joint document with the forex regulator on Monday.
In an announcement that includes 23 measures, the central bank vowed to step up the use of targeted tools including the relending program, which provides funds for banks to lend to sectors including those hit by the pandemic. The various expanded and newly-set up relending programs are expected to lead to 1 trillion yuan ($157 billion) in additional bank loans, it said.
The measures came after China reported its biggest decline in consumer spending and worst unemployment rate since the early months of the pandemic, as lockdown measures to curb Covid infections intensified economic risks and disrupted activities.
The PBOC called on local authorities to set appropriate minimum down payment requirements and mortgage rates based on each city’s conditions, and urged banks to support the reasonable financing needs of property developers and construction companies, according to the document.
Policy banks will need to step up their financing to major investment projects, while banks should be more proactive in lending to infrastructure projects and purchase local government bonds to support advanced construction, the PBOC said. Banks should also ensure reasonable financing needs of local government financing vehicles and avoid suspending or withdrawing loans from them blindly, it said.
The central bank also asked banks to increase the share of private companies among the recipients of new corporate loans.
The PBOC has transferred 600 billion yuan of profit to the central government as of mid-April, which was mainly used for tax rebates and transfer payments to local governments, it said. The profit transfer had the impact of increasing base money supply by 600 billion yuan, equivalent to what a 25 basis-point cut in the reserve requirement ratio would achieve, it said.
Separately, the China Banking and Insurance Regulatory Commission vowed to increase financial resources to logistics, transportation and courier industries, and use the relending funds well to lower financing costs. It will provide funding help to smaller businesses suffering from temporary difficulties due to the Covid, the regulator said in a statement on Monday.
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