CSRC & PBOC vow to lower financing costs

China has made a renewed commitment to support the real economy. After the State Council last week announced cuts to administrative costs for companies, China's central bank and the securities regulator have also made their commitments in this area.

Over the weekend, the China Securities Regulatory Commission promised to lower financing costs for SMEs, by enhancing transparency for financial institutions, and ensuring institutions simplify financing procedures.

The People's Bank of China announced that it is stepping up credit support for rural firms as well as SME financing.

The bank has set aside a 50 billion yuan quota for SME refinancing this year, and has also decided to further lower reserve requirement ratios for certain financial institutions. This is what one PBOC official says about these moves.

"Usually, the reserve requirement ratio for financial institutions is around 20%. Now we'd like to lower that rate for those institutions that have a higher proportion of loans going to the real economy. By launching such incentives, we hope that institutions can adjust their structures and put more focus on supporting rural and SME financing," said Ji Zhihong, head of Financial Markets Dept. of Poeple's Bank of China.