MNI POLICY:PBOC to Use More Policy Tools to Aid Small Business

     BEIJING (MNI) - The People's Bank of China (PBOC) will continue to use

policy tools, including targeted reserve ratio cuts, targeted medium-term

lending facility and pledged supplementary lending, to increase financial

support to private and small businesses, according to report on small business

lending released to the media on Monday. Here are some of the key points from

the report and remarks by officials presenting the report, including Zou Lan, a

deputy director of financial markets at the central bank. 

     - The central bank will implement a prudent monetary policy, increase

countercyclical adjustment and create monetary financial environment aiding

small business financing, Zou said. It will implement a "relatively low-RRR"

policy framework, he said.

     - In the first five months of this year, outstanding loans to small

businesses rose 21% from a year ago to stand at CNY10.3 trillion, said Zou. The

rate of increase was 5.8 pp faster than the rate of growth at the end of last

year, he said. 

     - NPLs on small business loans stood at 5.9% at end of May, 4.5 pp higher

than those of large companies, Zou said. To support small businesses in a

sustainable way, regulators must prevent financial risks and establish a

long-term effective mechanism, Zou said. 

     - Private and small businesses face increasing restrictions from the

slowing macroeconomy, and their capital-raising and financial capabilities are

declining, according to the report. 

     - Most new industries still lag behind real estate and automotive in

supporting the economy as China experiences "pains of structural adjustment,"

said the PBOC. 

     - Exporters face "quite large uncertainties with some sales and orders

reduced by the escalating trade conflicts, weakening exports' contribution to

the economy, according to the report.

     - The government will further increase fiscal policy support, including

state and local government financing  backing guarantees, to help enhance credit

and shoulder risks, and PBOC will increase information sharing and enhance

social credit system, according to the report.

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

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