CCTV:
We know the Chinese government is trying to lower the financing costs for small and medium-sized companies. How will this outbreak affect them? Are there any measures to ease their difficulties in accessing affordable financing? Thanks.
Zhou Liang:
The CBIRC has taken this issue very seriously. In 2019, we made a lot of efforts to address this problem. Bank loans to small and micro companies had a combined value of over 2 trillion yuan, up 24.6%, at a far higher growth rate than any other bank loans. The number of these companies taking out bank loans rose by 3.89 million. The average interest rate on new loans in 2019 was lowered by 0.69 percentage point from a year ago. If we look at all the factors combined, their overall financing costs have been lowered by more than 1 percentage point.
Due to the outbreak, a lot of small and micro companies are facing temporary difficulties. The CBIRC has asked banks and insurance companies to aid small firms hit by the coronavirus epidemic. For example, many banks have lowered their lending rates by 0.5 percentage point to small and micro companies in Hubei province, and other banks have offered them special loans or an exemption of overdue interest, so as to provide effective financing support for these companies.
But to tackle the root problems, we need to do more to offer financial support for small and micro companies. First, this year we will try to increase the growth rate of bank loans to small and micro companies, and the growth rate should not be lower than that for any other bank loans. The number of recipients should also see an increase. Second, we need to lower the financing costs for small and micro companies. Third, we will enhance the quality of such financing services, including the share of credit loans as well as the medium- and long-term lending for small and micro companies. Fourth, we will ensure that more new loans will be provided to companies that are first-time borrowers.
We will take measures in the following aspects:
First, to increase the supply. Commercial banks should work out a credit scheme for small and micro companies. And as for the different branches, we need to ensure that they take up their responsibilities. Policy banks should play an effective role in making countercyclical adjustments, and work with small- and medium-sized banks to provide refinancing services for small and micro companies. In addition, we should step up support for companies in the manufacturing sector. By doing so, healthy competition will be fostered in the financing markets and financial services will be delivered to the community level.
Second, to improve the credit structure. We should help banks step up their efforts in providing bank loans to small and micro companies that are first-time borrowers, or those who plan to continue their bank loans. A variety of financing products with regard to medium- and long-term lending should be developed in order to match companies' different financing needs.
Third, to further lower financing costs. According to the LPR mechanism, banks will set a reasonable pricing of interest rates to small and micro companies. The major banks need to take the lead in lowering costs, and small and medium-sized banks are encouraged to lower lending rates as well. At the same time, we will take serious measures to crack down on unreasonable fees. There still are some people and institutions that try to break the boundaries set by our regulations, and we will be tough on them this year.
Fourth, to further improve and implement differentiated supervision policies. We will try to raise the tolerance for non-performing loans to small and micro companies. We will also set up a long-term sound mechanism to encourage more lending to small and micro companies.
Fifth, to use advanced technologies, including big data, cloud computing and AI to improve the quality of financing services and to collect data. We will improve risk management controls for lending money to these companies and lower the costs for companies accessing different financing options.
Sixth, to improve credit information integration and sharing. Some small and micro companies do not have complete financial statements when they apply for loans. As such, we will work with the NDRC, finance, taxation, customs and market regulation authorities, and encourage local governments to set up a platform for sharing credit information about these companies.
We believe that with all these measures, we will be able to make tangible improvements in providing financial support for these small and micro companies this year.
Pan Gongsheng:
Mr. Zhou has already given the best answers to your question, but I still would like to share a few more points. Small- and micro-sized businesses and private businesses are less resilient to the epidemic and are easily impacted by the coronavirus outbreak. As such, specific policies need to be carried out during this special period. A few days ago, five ministries jointly issued a document containing 30 policies and measures. Many of them focus on providing financial solutions to support and help small- and micro-sized businesses and private businesses during this special time. Our banks, insurance companies, securities firms and other financial institutions have initiated several specific measures to help small- and micro-sized businesses overcome their financing difficulties.
Normally, easing small- and micro-sized businesses' financial difficulties is a complicated and systematic project which serves the real economy and promotes financial supply-side reform. This project requires perseverance and sustained efforts. Both the CPC Central Committee and the State Council place great importance to the financial difficulties of small- and micro-sized businesses and private businesses. We have taken many actions to help them overcome their difficulties and we have seen the effects of some of our work. Mr. Zhou addressed this very clearly in his explanation. We have no doubt that helping small- and micro-sized businesses solve their financial problems is still the most important task in our financial system this year and in the future. In this regard, we need to reform and improve our monetary policies, fiscal policies, regulatory policies and taxation policies. We also need to improve the policies as well as the incentive and restraint mechanisms inherent in commercial banks' services to small- and micro-sized businesses. We should encourage commercial banks to enhance their services to small- and micro-sized businesses as well as improve their internal resource allocation, work performance reviews, risk assessment, financial technology and so on. We should also work with local governments to improve credit information and risk allocation mechanisms.
As Mr. Zhou just said, with the joint efforts of our financial management department and financial institutions, and with our perseverance and sustained efforts, I think that these problems should definitely be solved to some degree. Thank you!
