PBOC clarifies sectors targeted for support

China's central bank on Tuesday outlined areas it will target in providing financial support and implementing reform measures, following its latest move to cut reserve requirements for banks engaged in lending to the agriculture sector and small firms.

To boost the real economy, the People's Bank of China (PBOC) announced on Monday that it will cut the reserve requirement ratio (RRR) by 0.5 percentage points for banks engaged in proportionate lending to the farming sector or small- and micro-sized enterprises.

"Under a circumstance that the total amount of social financing remains generally stable, the financing difficulties [for some sectors] are more of a structural problem," said an official from the central bank who declined to be named.

Monday's RRR cut is expected to guide credit support to the agricultural sector and small companies, areas that are often deemed to have limited access to financing.

This is the second time within two months that the PBoC unveiled a narrow-based RRR cut to support sections of the economy. On April 22, a RRR reduction was introduced for county-level rural commercial banks and rural credit cooperative unions.

But the central bank said on Monday that this did not mean a change to the country's fundamental monetary policy.

The PBoC will fine-tune policy in a timely and appropriate manner to create a steady monetary and financial environment for economic restructuring and upgrading, according to the official.

The official noted sectors and industries that will come under the PBoC's focus in extending support.

The bank will carry out policy measures that enhance finance in sectors including services, cultural, technology, service outsourcing, tourism, household services, and strategic emerging industries, the official said.

Financial services concerning the restructuring in the railway and shipbuilding industries will be improved, as well as those supporting shantytown renovation and energy saving and environment protection industries.

As for financing among small firms, the central bank will bring interbank bond market into play to diversify financing options and accelerate the establishment of a credit system for small and micro businesses, according to the official.