Chinese banks find new cure for capital-thirsty private enterprises

Date Nov 26 2018 09:51:54 Source:Xinhua

The Industrial and Commercial Bank of China (ICBC) has mapped out a three-year plan to boost capital support to private businesses in response to calls for easing the financing difficulty of private enterprises.

Within three years, ICBC's inclusive loans targeting small and micro-enterprises will surge more than 30 percent annually, with the net lending to private enterprises growing by no less than 200 billion yuan (about 28.6 billion U.S. dollars) annually.

The number of new private-enterprise clients will grow by 5,000 or higher annually, said ICBC president Gu Shu in an interview with Xinhua.

Financial institutions have been mobilized to optimize their credit services and enhance their risk control capabilities amid the nationwide efforts to ease the capital shortage of private firms.

China Construction Bank (CCB), for instance, has released 26 measures to further improve financial services for private enterprises to facilitate their healthy development.

One measure is to raise a seed fund of 30 billion yuan which is expected to leverage a scale of funding worth 300 billion yuan to support the development of technological innovation-based enterprises.

While guarding against risks, CCB also plans to bring the outstanding loans for inclusive finance to 1 trillion yuan in the next three years and keep the non-performing loan ratio within 3 percent.


A key obstacle preventing capitals flowing to private enterprises somehow relates to credit clerks who are reluctant to lend out of fear of bad loans, as private enterprises, especially the smaller ones, are less capable to withstand risks, Gu said.

"It's essential to give credit clerks positive incentives and guidance, while getting rid of their burden," he said.

In the future, ICBC's grassroot outlets and credit clerks excelling in performance assessment concerning inclusive finance will be granted special rewards.

ICBC's lending procedures will be further streamlined and standardized so that credit clerks who have fulfilled their due diligence could be exempted from taking responsibility for bad loans, he said.

In other words, ICBC will be a bit more tolerant with bad loans relating to private enterprises, and the losses in revenues of subsidiary banks caused by the falling loan prices would be made up by the head office.


In Gu's words, supporting private enterprises was not to "follow the fashion" but a significant part of ICBC's efforts to pursue sustainable development.

Currently, ICBC is speeding up the establishment of small and micro financial service centers where competent credit clerks who know small businesses well can get together to deal with market selection, credit approval and risk control more efficiently.

They may also use big data technology and other information available to make judgements on the business operation of small enterprises.

"For us, all enterprises are our clients, whatever ownership and size they have or whatever industries they are in. The only gauge is their performance, good or bad," said Gu.

For small enterprises who have encountered temporary difficulties but focus on their main business and have a bright prospect, ICBC promised to use all sorts of risk mitigation tools to help them pull through. On the contrary, zombie enterprises will have to be cleared out, he said.

So far, ICBC has established 230 mall and micro financial service centers, covering more than 75 percent of the bank's loans to small and micro enterprises.

Its 38 first-level subsidiary banks have set up inclusive finance departments. By the end of this year, the departments will be established in more than 400 second-level subsidiary banks.

In addition, ICBC was also trying to channel more capital to invest in the corporate bonds of private enterprises. So far, it has helped three private companies raise a total of 1.5 billion yuan through bond issuance.

In less than a month, ICBC's credit clerks have visited more than 5,000 small and micro enterprises, provided a capital support of nearly 10 billion yuan through various means and inked cooperation agreements with 100 backbone private firms.

The bank also mobilized 10,000 customer managers to conduct field surveys in private enterprises.

China, Japan sign cooperation deals on energy conservation

Date Nov 26 2018 09:48:12 Source:Xinhua

China and Japan on Sunday signed cooperation agreements for 24 projects in areas including energy conservation, new energy development and pollution control.

The deals were signed during a forum on bilateral cooperation in energy conservation and environmental protection held in Beijing.

The areas of cooperation also included the circular economy, smart city development, and ways to tackle climate change.

He Lifeng, head of the National Development and Reform Commission, said that as China is vigorously pushing a new round of high-level opening-up, the country welcomes foreign companies, including Japanese firms, to invest and do businesses in China.

The forum, which was first held in 2006, has played an important role in advancing economic and technological exchanges and pragmatic cooperation between the two countries, He said, suggesting efforts be made to boost international cooperation and explore new patterns of mutual benefits and win-win results.

China's petroleum and chemical industry report higher profits

China's petroleum and chemical industry has generated some 712.1 billion yuan in total profit over the first nine months, up 45.2 percent from the same period of last year, official data showed.

The figure took up 14.3 percent of the total profits generated by domestic industrial enterprises that each has an annual main operation income of more than 20 million yuan, according to the Ministry of Industry and Information Technology.

With a total asset of 12.75 trillion yuan, up 6.1 percent over the same period last year, the sector has seen its asset-liability ratio fall by 1.16 percentage points to 54.19 percent.

The sector's profit rate climbed up by 1.56 percentage points to 7.43 percent, thanks to the solid improvement in the operation efficiency of petroleum and natural gas exploration business as well as the good development momentum in oil refining and chemical industry.

The overall prices of petroleum and natural gas surged by 24.6 percent during the January-September period, while those for chemical raw materials and chemical products jumped by 7.2 percent.

The industry's total exports during the same period went up by 22.8 percent to 521.66 billion yuan. The growth rate was 8.6 percentage points higher than the same period of last year.

Fixed assets investment in chemical raw materials and chemical manufacturing rose by 1.7 percent, the first increase since the end of January but lower than the 5.4-percent national average growth for industrial investment, according to the figures of the National Bureau of Statistics.

China's yuan funds outstanding for foreign exchange drop in October

Date Nov 26 2018 09:46:49 Source:Xinhua

China's yuan funds outstanding for foreign exchange continued to drop in October, central bank's data showed.

The funds stood at 21.3168 trillion yuan ($3.1 trillion) at the end of October, down from 21.4084 trillion yuan a month earlier, according to the People's Bank of China (PBOC).

As the Chinese currency is not freely convertible under the capital account, the central bank has to purchase foreign currency generated by a trade surplus and foreign investment in the country, adding funds to the money market.

Such funds are an important indicator of cross-border foreign capital flows and domestic yuan liquidity.

As a similar measure of capital flows, China's foreign exchange reserves stood at 3.053 trillion dollars last month, down 33.9 billion dollars from a month earlier, PBOC data showed.

The State Administration of Foreign Exchange said despite the intricate international situation and growing uncertainty in the global market, the Chinese economy has maintained its stability and operated within a reasonable range so far this year.

China Regulator steadily opens financial sector

Date Nov 26 2018 09:45:13 Source:China Daily

China further opened its financial sector to foreign investors, with the banking and insurance regulator giving two more financial institutions the nod for market access.

The China Banking and Insurance Regulatory Commission announced on Sunday it approved Munich-based Allianz SE's application to begin setting up Allianz (China) Insurance Holding Company Ltd, which will become the first foreign-funded insurance holding company in China.

The regulator also allowed Chiyu Banking Corp Ltd, a licensed bank in Hong Kong, to make preparations to set up a branch in Shenzhen, Guangdong province.

Since the beginning of the year, the regulator has made a series of opening-up efforts, including granting preparatory approvals to Fubon Bank (China) Co Ltd's application to establish a branch in Chongqing, and allowing ICBC-AXA Life Assurance Co Ltd to establish an asset management company, and Korean Reinsurance Co Ltd to set up a branch in China.

"The CBIRC will further open up China's financial sector in a steady manner in addition to making continuous efforts to raise the level of risk prevention and control and to improve regulatory capabilities," the banking and insurance regulator said in a statement posted on its website on Sunday.

With the country further expanding access to its financial market, foreign financial institutions will enter a period of accelerated business growth in China, said Zhang Xingrong, managing director of the Institute of International Finance at Bank of China Ltd.

"By bringing greater competition to China's financial sector, foreign financial institutions will help improve the efficiency and quality of financial services and make them more accessible to Chinese customers, while simultaneously reducing service costs.

"The increased competition and cooperation among foreign and domestic financial institutions will boost the competitiveness of the whole sector and will also benefit domestic financial institutions with regard to their global expansion," he said.

China is widening foreign access to its financial sector in various aspects under established policies.

The banking and insurance regulator has removed the 20 percent ceiling on ownership of a Chinese commercial bank or an asset management company by a single foreign investor, and the 25 percent cap on total foreign ownership of such companies.

This month, the Chinese central bank announced it had approved a joint venture of American Express Co in China regarding its application to commence operational preparations for a card clearing institution in the country.

China's PPP projects drive over 950 bln-USD investment in past 5 years

Date Nov 23 2018 17:05:41 Source:Xinhua

Public private partnerships (PPP) signed in the past five years have driven 6.6 trillion yuan (about 952 billion U.S. dollars) of investment in China, the China Securities Journal reported.

A total of 4,302 PPPs had been signed and implemented by the end of October, Jiao Xiaoping, head of the China Public Private Partnerships Center of the Ministry of Finance, was quoted by the newspaper as saying at a forum held in Shanghai Thursday.

The projects covered various fields including urban engineering, public transportation and environmental protection, according to the newspaper.

PPPs are a collaborative investment model between government and private companies.

Chinese authorities have explored funding infrastructure and public works through PPP models since late 2013, amid growing concerns over rising local government debt.