New | PBOC’s re-lending plan seen as selectively steering credit to help spur economy
The latest iteration of a re-lending scheme, unveiled last weekend by China’s central bank, will help steer new lending towards private companies in an effort to fuel growth
Mainland Chinese policy makers are using new tools to stimulate the economy, in a strategy of selectively channelling lending towards private enterprise, according to analysts.
A re-lending programme, which expands an earlier lending scheme, unveiled on Saturday by the People’s Bank of China, is expected to inject 50 billion yuan into the market.
Though limited in size, analysts said the initiative will improve the PBOC’s ability to calibrate the scope and size of its liquidity injection operations.
“It is the authority showing their determination to support the more productive parts of the economy,” Li Yimin, a senior analyst with the Shenwan Hongyuan Securities, said.
Under the new arrangement, banks in 11 provinces will be able to use qualified loans as collateral to borrow funds from the central bank. The banks have been directed to channel these funds towards smaller businesses, as part of a targeted lending strategy to stimulate job creation.
The PBOC’s weekend announcement was made against the backdrop of data showing China’s manufacturing and external trade data extending sharp contractions.
