New leas­ing mea­sures aid re­form

China Daily (Canada) - - FRONT PAGE - By ZHAO YI­NAN in Bei­jing zhaoy­i­nan@chi­nadaily.com.cn

The Chi­nese gov­ern­ment ap­proved a se­ries of sup­port­ive mea­sures on Wed­nes­day for the de­vel­op­ment of fi­nan­cial leas­ing, part of the gov­ern­ment’s ef­forts to deepen fi­nan­cial re­form and ease fund­ing dif­fi­cul­ties.

A State Coun­cil ex­ec­u­tive meet­ing, presided over by Premier Li Ke­qiang, de­cided to re­move the min­i­mal cap­i­tal re­quire­ment for fi­nan­cial leas­ing com­pa­nies when set­ting up sub­or­di­nate busi­nesses, stream­line ad­min­is­tra­tive pro­ce­dures for ex­port­ing agri­cul­tural and med­i­cal equip­ment, and en­cour­age the leas­ing of equip­ment in high tech­nol­ogy and clean energy sec­tors, ac­cord­ing to a state­ment re­leased af­ter the meet­ing.

The move is ex­pected to en­cour­age com­pa­nies to in­vest more in bet­ter equip­ment and fa­cil­i­tate the restruc­tur­ing and up­grad­ing of in­dus­tries, it said.

Cong Lin, CEO of ICBC Fi­nan­cial Leas­ing, a spe­cial­ist leas­ing op­er­a­tion of the In­dus­trial and Com­mer­cial Bank of China, China’s largest com­mer­cial bank, said the mea­sures will be­come a blue­print for the in­dus­try’s de­vel­op­ment.

ICBC’s leas­ing arm was the first of its type in the coun­try when launched in 2007.

The de­vel­op­ment of fi­nan­cial leas­ing will also cre­ate more op­por­tu­ni­ties for ... the ‘go­ing global’ of Chi­nese en­ter­prises.”

Cong Lin, CEO of ICBC Fi­nan­cial Leas­ing

Cong said fi­nan­cial leas­ing is closely re­lated to the real econ­omy and a sup­port to na­tional strate­gies, such as the Belt and Road Ini­tia­tive and its plan to up­grade man­u­fac­tur­ing in­dus­tries by 2025, since these strate­gies all re­quire large amounts of cap­i­tal.

“The de­vel­op­ment of fi­nan­cial leas­ing will also cre­ate more op­por­tu­ni­ties for in­ter­na­tional in­dus­trial ca­pac­ity co­op­er­a­tion and the ‘ go­ing global’ of Chi­nese en­ter­prises,” he said.

China’s fi­nan­cial leas­ing mar­ket is ex­pected to hit 5 tril­lion yuan ($780 bil­lion) dur­ing the first half of next year to be­come the world’s largest, sur­pass­ing that of the United States, ac­cord­ing to a re­port re­leased by the China Fi­nan­cial Leas­ing As­so­ci­a­tion.

Tian Hui, a re­search fel­low with the In­sti­tute for Fi­nance of the State Coun­cil’s De­vel­op­ment Re­search Cen­ter, said fi­nan­cial leas­ing as an emerg­ing in­dus­try has wit­nessed swift de­vel­op­ment in re­cent years, and the in­dus­try still boasts great po­ten­tial for fur­ther de­vel­op­ment.

“A large pro­por­tion of fi­nan­cial leas­ing is in the sec­tor of in­fra­struc­ture con­struc­tion, which is in tune with China’s in­vest­ment-driven model of de­vel­op­ment,” Tian said.

For in­stance, Chi­nese air­lines used to pur­chase fleets with bank loans, while by the end of 2013, nearly half of com­mer­cial air­planes in China were leased, and the pro­por­tion is ex­pected to keep grow­ing, ac­cord­ing to sta­tis­tics from the De­vel­op­ment Re­search Cen­ter.

The surge in fi­nan­cial leas­ing ac­tiv­i­ties has been partly fu­eled by listed Chi­nese com­pa­nies tap­ping the ser­vice for cheap credit, Tian said.

Com­pa­nies in the tele­com, agri­cul­ture, phar­ma­ceu­ti­cal, energy and equip­ment man­u­fac­tur­ing sec­tors are in­creas­ingly fond of sale-lease­back, a busi­ness model in fi­nan­cial leas­ing that helps com­pa­nies ob­tain fi­nanc­ing by rent­ing as­sets that they sold ear­lier.

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