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Govt · Markets
Financial sector's support to boost manufacturing delivered results in China
CKN
2021/04/02 04:20:44
5,307

Apr 02, 2021 (China Knowledge) - In a press conference on yesterday, China’s central bank, the People's Bank of China (PBoC), said that the country's efforts to boost investment in its manufacturing sector by leveraging support from the financial sector has gained results.

Last year saw increased investment in many sectors except manufacturing, which saw a YoY decrease of 2.2%.

Zou Lan, head of PBOC's Financial Market Department, attributed the decrease to three reasons: external economic environment amid the pandemic causing firms to become less liquid; manufacturing loans being used to deal with liquidity issues instead of investment; and investment capacity and confidence have yet to be fully restored.

Investments did increase in high-tech manufacturing as the country makes adjustments to its industrial structure, but these industries accounted for a limited portion of the overall sector.

Furthermore, many manufacturers have been adopting a light assets approach, such as leasing plants and equipment instead of purchasing them.

According to Zou, the PBOC has worked together with other financial departments to promote large-scale, medium- and long-term loans to the manufacturing industry in order to support the high-quality development of the manufacturing sector.

As at the end of Jan 2021, the balance of long-term and medium-term loans in the manufacturing was RMB 5.46 trln, a YoY increase of 36.5%. It maintained positive growth for 15 consecutive months, reversing the previous slowdown in the growth rate of long-term and medium-term loans.

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