China’s financial authorities jointly announced a series of measures on Saturday to promote financial support for the prevention and control of the novel coronavirus outbreak, to guarantee daily necessities supply and help ensure stable growth of the real economy.
Chinese financial authorities will resort to various monetary policy mechanisms such as open market operation, standing loan, refinancing and rediscount, to inject sufficient liquidity into the domestic financial market, according to a statement jointly released by the People’s Bank of China (PBC), the Ministry of Finance, China Banking and Insurance Regulatory Commission, China Securities Regulatory Commission and the State Administration of Foreign Exchange.
The PBC, China’s central bank, will provide sufficient liquidity and maintain the stable operation of currency interest rates for the financial market when it opens on Monday through intensified countercyclical regulation, said Pan Gongsheng, deputy governor of the PBC.
During the epidemic prevention and control period, the PBC will provide a total of 300 billion yuan ($43 billion) low-cost special re-lending fund to major national as well as some local banks in provinces, such as Central China’s Hubei Province. The guidelines also directed the banks to obtain the re-lending funds to provide credit support with preferential interest rates to major medical and daily necessities material production enterprises, Pan said.
The PBC said it encourages financial institutions to cut lending rates to help lower social fundraising costs and increase credit loan and medium and long term loans to help the firms endure the hardship.
Financial institutions should not blindly draw back, halt or suspend loans to companies being affected by the outbreak, particularly small and micro-businesses that are currently encountering hardships because of the virus outbreak, the PBC said.
During the period of epidemic prevention and control, the backbone enterprises that produce, transport, and sell important medical and daily necessities goods should be put on a list, according to the statement. For enterprises on the list, the PBC shall provide credit support with preferential interest rates through low-cost special re-lending and central financial discounts.
In the next step, authorities will continue to facilitate the import of epidemic control materials and global donation by simplifying procedures concerning foreign exchanges, according to Pan.
The impact of the epidemic on China’s economy is temporary and the fundamentals of the domestic economy that feature sound and high-quality growth in the long term remain unchanged, the statement said.
Given the domestic and global environment, active factors in economic growth are increasing, thanks to the resilience of the Chinese economy, which will constitute support for stable operation of the domestic financial market, the statement added, noting that investors should insist on long-term investment while avoiding unnecessary impact triggered by irrational market sentiment.
Photo:Global Times
