MNI POLICY: China Lets SMEs Use Wider Range of Loan Collateral

     BEIJING (MNI) - China will allow small and medium-size enterprises (SMEs)

to obtain bank financing by using receivables, warehouse receipts and

inventories as collaterals, Yang Liping, the chief inspector at the China

Banking and Insurance Regulatory Commission at a briefing Friday, as Beijing

attempts to restore the virus-hit production chain and prevent large-scale

bankruptcies.

     Banks may also reduce the amount of acceptance bill deposits needed by

companies with good credit, said Yang. Five large state-owned banks must ensure

outstanding loans to SMEs in the first half be at least 30% more than a year

ago, and policy banks will extend 350 billion yuan more special credit lines at

preferential rates to private SMEs. This year, banks and financial institutions

will strive to lend CNY500 billion more to individual business operators than

last year, Yang said.

     The major banks will also boost lending to industry-leading companies and

encourage them to pay their SME suppliers or buyers early to ease cash flow

pressures, said Yang.

     Here are other key points from the briefing, also attended by Vice Minister

of Industry and Information Technology Xin Guobin.

     - Nationwide, over 95% companies outside Hubei province have resumed

operation, with 80% employees now returned to duties, said Xin. The operating

rate of SMEs has reached about 60%, Xin said.

     - China's large domestic market will help absorb the impact from the spread

of coronavirus in Europe and the U.S. in the near term, although there will be

"some impact" if the situation worsens, Xin said.

     - Producers of auto parts in Hubei have resumed production, including two

passenger car producers, Dongfeng and Honda, in Wuhan, said Xin.

     - The industry ministry will expand domestic demand and stabilize car

consumption. It will also further accelerate the construction of communications

projects, as well as new infrastructure such as 5G networks, big data, AI, and

smart cities, said Xin.

--MNI Beijing Bureau; +86 (10) 8532-5998; email: wanxia.lin@marketnews.com

--MNI Beijing Bureau; +86 10 8532 5998; email: william.bi@mni-news.com

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

[TOPICS: M$A$$$,M$Q$$$,MT$$$$,MGQ$$$]