China’s small businesses are promised more money
Chinese premier Li Keqiang has told the country’s banks they need to increase their lending to small companies, but the details are fuzzy.
By Pan Yue
China’s annual parliamentary gathering, bringing together the National People’s Congress and a Chinese People’s Political Consultative Conference, is watched avidly by economists, analysts and bankers because it is often the launchpad for new policies. And so it was in early March, when the prime minister announced new rules for banks.
Premier Li Keqiang said that large state-owned commercial banks must increase their lending to micro and small enterprises (MSEs) by 30% this year. The government has been encouraging banks to lend to privately owned enterprises (POEs) since last year – effectively turning its back on an earlier deleveraging campaign – but this is the first time it has given them an explicit target.
Perhaps, though, the government should be a bit more explicit on who it wants the money to go to. Onshore bankers tell Asiamoney that there is no clear definition of an MSE – it depends which of China’s regulatory bodies you ask.
The State Administration of Taxation sets a cap for the total assets, number of employees and taxes. China’s Ministry of Industry and Information Technology categorizes large, medium-sized, small and micro enterprises by the number of employees and sales, with each industry having different requirements.