Hong Kong Economic Herald:
The industrial chain consists of interlocked links. Should any of them break down, upstream and downstream enterprises would be affected. What are the China Banking and Insurance Regulatory Commission's long-term plans on supporting the coordinated development of the industrial chain? Thank you.
Yang Liping:
Thank you for your question. You may have noticed that there are some temporary arrangements for coping with the epidemic's impact in the policies introduced earlier. For example, we will appropriately raise accounts receivable, or ratio of inventory and warehouse receipt pledge financing, and encourage banks to charge businesses with good credit records less cash deposit for acceptance drafts to increase the cash flow of upstream and downstream enterprises. Such policies were formulated with consideration to the situation that these enterprises didn't have cash revenues when they had to suspend normal production and operation due to the epidemic, and now, they need more cash flow to organize production and maintain operation, including cash for essential expenses arising from paying workers, keeping machines running, and other business activities.
We have made some annual arrangements to support micro-, small-, and medium-sized enterprises (MSMEs). Just now, we have briefed some of our targets. For example, the five large banks will increase the balance of their inclusive loans to micro and small businesses by no less than 30 percent year-on-year in the first half of this year. There may be certain adjustments to the target as the situation changes, but we will not shift our long-term policy direction on guiding large banks to support micro and small businesses.
We also introduced some policies on industrial chain financing, especially the one that is in great concern of upstream and downstream MSMEs of core enterprises — increasing working capital loans to core enterprises and setting a reasonable line of credit to ensure unimpeded capital flow between upstream and downstream enterprises. This should be a long-term arrangement. To tackle the two bottlenecks in the long run, first, we should give full play to the role of core enterprises in making the links unobstructed between upstream and downstream enterprises; second, we should make all-out efforts to help micro and small businesses solve financing difficulties and reduce financing costs. However, this is a relatively complicated issue. Earlier, when I cited the case that the core enterprises may occupy funds on account of upstream and downstream enterprises as an example, you may think the core enterprises refer to those in the manufacturing industry. Actually, there are also many other types of core enterprises in our industrial chains, such as e-commerce platforms and logistics companies. Recently, we have been planning to ask banks to reach out to them and carry out studies and discussions on how to utilize core enterprises in these industrial chains to smooth the capital chain between upstream and downstream enterprises.
We will make timely adjustments to our work when it is necessary. Thank you.
