Nation’s local governments pledge solid support for private businesses
Authorities in many regions of China have pledged support for private enterprises in a bid to stimulate the economic growth and boost job creation.
For example, the Beijing municipal government is offering customized services to help private-sector companies address a wide array of issues.
Local authorities and private investors have created a capital pool of 35 billion yuan ($5.05 billion) to ease liquidity risks for listed companies that have pledged shares as collateral for loans, Beijing Mayor Chen Jining said in an interview, adding that the city will support private companies in issuing bonds to raise funds.
Many companies that have pledged shares face the risk of margin calls if their shares decline, a situation that forces them to provide extra funds to bring their margin accounts up to maintenance levels. If they fail to do so, lenders can sell the pledged shares, triggering further market volatility.
“The city government in Beijing will clear investment hurdles and open private capital to more than 60 projects with a total investment of 100 billion yuan,” Chen said.
In Shanghai, the municipal banking and insurance regulator ordered local lenders to optimize lending policies and eliminate discriminatory barriers, so as to create a level playing field and increase lending to private-sector companies.
The regulator urged the expansion of financial channels and provision of sufficient financing for private companies at different growth stages.
It also called for more innovative products to increase the availability of loans for small and micro-sized enterprises, as well as regulation of administrative fees and a reduction of borrowing costs for the private sector.
South China’s Guangdong Province, known for its booming private sector, has the largest number of private companies and the highest level of corporate tax revenue in China. The province announced a package of policies to support private companies, including lower electricity and gas rates for industrial use and favorable loans to small and micro-sized companies.
In the old industrial base of Northeast China’s Heilongjiang Province, local authorities will continue to improve the business envi- ronment. Measures taxes and fees, red costs, the creation o field, and a crackdow property rights viola ment hurdles.
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