China steps up financial aid to industries hit by COVID outbreaks

China will advance financial assistance to companies, businesses and individuals affected by COVID-19 outbreaks, the central bank said on Monday, as part of measures to cushion the economic downturn. Authorities will guide financial institutions to extend lending and give up profits to the real economy, the People’s Bank of China (PBOC) said in a statement on its website. Financial institutions must flexibly support those affected by COVID by deferring loan repayments reasonably and delinquent loans may not be recorded, central banks say. China’s central bank said in March it would pay more than 1 trillion yuan in profits to the central government this year.

China’s economy slowed in March as consumption, real estate and exports were hit hard, tarnishing faster-than-expected first-quarter growth figures and worsening an outlook already weakened by COVID-related restrictions -19 and the war in Ukraine.

Financial institutions should appropriately purchase local government bonds to support infrastructure investment, the central bank said.

China will set reasonable down payments and minimum interest rates on commercial housing loans, and meet the reasonable financing needs of property developers and construction companies, to help stabilize the property market, the PBOC said.

By mid-April, the PBOC had paid out 600 billion yuan ($94.31 billion) in profits to the central government, equivalent to a 25 basis point cut in banks’ required reserve ratios (RRRs), the central bank said, adding it is on track to pay out more than 1.1 trillion yuan in profits this year.

Financial institutions should actively respond to the financing needs of transport and logistics companies and truckers, as part of measures to support logistics and supply chains, he added.

On Friday, the PBOC announced it would reduce the RRR — the amount of cash banks must hold as reserves — for the first time this year to support a slowing economy.

China will also make it easier for businesses to incur external debt, help businesses improve the use of cross-border yuan settlements and currency hedging, the central bank added.

Summary of news:

  • China steps up financial aid to industries hit by COVID outbreaks
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