Chinese Government Takes Steps to Strengthen Financial Support for Private Enterprises
Recently, Pan Gongsheng, Secretary of the Party Committee and Governor of the People’s Bank of China, led a symposium on financial support for the development of private enterprises. The goal of the meeting was to enhance the connection between banks and enterprises and explore measures to strengthen financial support for private enterprises. Pan Gongsheng emphasized the importance of coordinating financial, fiscal, and industrial policies and directing more financial resources towards the private economy.
During the symposium, major financial institutions, including Industrial and Commercial Bank of China and China Construction Bank, pledged to play a significant role in supporting private enterprises. They expressed their commitment to improving the stability of loans to private enterprises, expanding credit coverage for small and micro enterprises, and supporting the underwriting and issuance of bonds by private companies. The Interbank Market Dealers Association also promised to increase bond financing support tools for private enterprises and innovate the bond market to meet their diverse financing needs.
Liu Shui, director of enterprise research at China Finger Research Institute, commended the financial regulatory authorities for effectively implementing measures to support the development of private enterprises. He also highlighted the three arrows of real estate financing, which aim to meet the reasonable financing needs of enterprises. With the implementation of follow-up policies, the financing environment for private housing enterprises is expected to improve, thereby curbing the risks faced by these companies.
However, despite the loosening of real estate industry policies since the fourth quarter of last year, many private real estate companies continue to face serious financing difficulties. According to data from the Middle Finger Research Institute, several real estate companies have been delisted this year, with estimates suggesting that the number of delisted companies may exceed 10 by the end of the year. The delisting of these companies adversely affects the industry, its suppliers, shareholders, and employees.
The financing environment for real estate companies has improved to some extent, but the benefits are predominantly enjoyed by high-quality and established companies. Private enterprises still face challenges in accessing bond financing. The Crane Research Center reported a decrease in the total financing of real estate companies in the first half of 2023 and highlighted a concentration of bond issuance among state-owned enterprises. The third quarter of this year is expected to bring heightened debt maturity pressures for real estate companies, potentially resulting in defaults and further delistings.
To mitigate these challenges, policy support must be intensified, particularly for real estate credit and private housing enterprises. The People’s Bank of China and the State Administration of Financial Supervision and Administration recently extended the deadline for policies related to financial support for the stable and healthy development of the real estate market.
It is important to note that the Securities Times, the source of this information, emphasizes that the content is for reference only and does not constitute investment advice. As always, investors are encouraged to exercise caution and make informed decisions.