Editor's note: Two sessions in progress. China Reform Daily recently interviewed Shen Guojun, CPPCC National Committee member, and Founder and Chairman of Yintai Group, on further addressing the issue of how private enterprises find securing financing difficult and costly. The relevant report has drawn the attention of the National Development and Reform Commission and has been forwarded. The following is the full text of the report.
“To further address the issue of private enterprises finding securing financing difficult and costly, differentiated regulatory and incentive policies as well as guidance measures should be established to guide financial institutions toward linking performance appraisal to supporting private enterprise economic development, and the appraisal weighting of the lending business to private enterprises should be raised.” Shen, who is a CPPCC National Committee member, member of the Standing Committee of the Central Committee of China Zhigong Party, as well as Founder and Chairman of Yintai Group, proposed three recommendations when interviewed by China Reform Daily and ReForm.net reporters.
Precision policies to increase finance supply efficiency should be introduced. This meant leveraging the industry chain, the supply chain, STAR Market, business districts and customer groups to develop asset-light and special credit related financial products. A precise bank-enterprise linkage, comprising industry, business district and regional features, should be developed so that banks and enterprises could be linked online and offline by different methods, which would effectively expand finance supply for enterprises in industries such as manufacturing, services, and technological innovation.
In addition, a package of diverse policies should be introduced to guide financial institutions to build a long-term mechanism that would give them the “courage, willingness, ability and will” to lend. The due diligence and exemption measures and criteria that banks adopt to serve private enterprises should be established and improved as soon as possible, and tolerance for the non-performing loans of small and micro enterprises differentiated. The development of small and medium-sized financial institutions that primarily serve micro, small and medium-sized private enterprises should also be supported. Meanwhile, joint credit pilots should be deepened to help foster medium- to long-term partnerships between financial institutions and private enterprises. The application of credit information should be deepened, and innovative mortgage and pledge products actively explored to open a new channel for small and micro enterprises that lack collateral to secure financing.
The establishment of a new credit enhancement mechanism for private enterprises should be explored as well. Elsewhere, bond financing backed instruments for private enterprises should be developed so that private enterprise financing may be supported through market-oriented credit enhancement. Regions where conditions permit should consider setting up risk compensation funds for small and medium-sized private enterprises, and the launch of private enterprise credit enhancement demonstration projects should be studied. Should a private enterprise or SME apply for accounts receivable financing, and the accounts payable was a government agency, public institution or large enterprise, it should promptly recognize the claim and debt relationship and actively help such qualified private enterprise expand access to direct financing.