China's stimulus financing spelt out

Special Report:Global Financial Crisis

BEIJING, Dec. 4 -- The government Wednesday unveiled

a raft of measures to encourage lending by financial institutions to

infrastructure projects, small businesses and potential home and car buyers.

Also, an extra credit volume of 100 billion yuan

($14.6 billion) will be provided to three policy banks this year to prop up

economic growth amid the worsening global financial crisis.

An executive meeting of the State Council, or the

Cabinet, presided over by Premier Wen Jiabao, also said steps will be taken to

help financial institutions better ward off risks.

Banks, securities firms and insurers should take

coordinated action to play a bigger role in supporting economic growth and

contributing to industrial restructuring, it said.

In the face of the global financial crisis, it is

imperative to implement a "pro-active fiscal policy" and "a moderately easy

monetary policy"; and the financial sector should play a bigger role in economic

development, the meeting said.

It announced nine measures to boost the role of the

financial sector in the economy including:

Urging commercial banks to meet the demand for loans

from small- and medium-sized enterprises - which have been severely battered by

the economic slowdown - investors in the countryside, as well as home and car

buyers.

Expanding the issue of treasury bonds.

Allowing insurance companies to invest in major

infrastructure projects.

Using exchange and interest rates as well as the bank

reserve requirement ratio to ensure liquidity in the banking system.

Analysts said they believe the move is part of the

government's answer to how the massive 4-trillion-yuan ($586 billion) stimulus

package, announced on Nov 9, will be financed.

The central government said last month it would

provide 1.18 trillion yuan, or 30 percent, while local governments and

enterprises are to make up for the rest.

But some analysts say it would be difficult for

enterprises to obtain loans from spooked lenders; and some local governments,

grappling with falling revenues, simply lack the financial muscle to chip in.

"Some of the measures are designed to finance the

infrastructure projects in the stimulus package," said Zhang Jun, director of

the China Center for Economic Studies at Fudan University.

The government has earmarked 1.8 trillion yuan for

such projects as railway, highway and airport construction, according to the

National Development and Reform Commission.

"Some of the projects would be new revenue sources

for insurance companies and banks," said Lian Ping, chief economist of Bank of

Communications. "However, it's necessary to keep an eye on potential risks."

China's economy has been losing steam since the end

of last year, dragged down by weakening foreign demand for its goods and a slump

in the property sector.

Economic growth dropped to 9 percent year-on-year in

the third quarter, compared to 11.4 percent for the whole year of last year.

The government has already cut interest rates four

times over the past months and lowered the ratio of deposits lenders are

required to set aside, in an effort to reduce borrowing costs and increase

liquidity in the banking system.

(Source: China Daily)

China Cabinet meeting encourages

commercial banks to make more loans


BEIJING, Dec.

3 (Chinese media) -- China's State Council, or the Cabinet, said Wednesday it would

adopt more favorable policies and update the financial system so as to encourage

the country's commercial banks to grant more loans to support economic growth.

At an executive meeting presided over by Premier Wen

Jiabao, the Cabinet also said measures should be taken to raise the country's

ability to ward against risks among financial institutions.

China makes policies to address

difficulties of enterprises, promote economic

growth

BEIJING, Nov. 26

(Chinese media) -- China's State Council, or the Cabinet, said on Wednesday that more

efforts would be made to encourage enterprises to upgrade technology and engage

in independent innovation.

It also said there would be policies to promote merger and

acquisition among enterprises.

China's 4 trillion yuan stimulus to

boost economy, domestic demand

BEIJING, Nov. 9 (Chinese media) -- China said on Sunday it will

loosen credit conditions, cut taxes and embark on a massive infrastructure

spending program in a wide-ranging effort to offset adverse global economic

conditions by boosting domestic demand.

This is a shift long advocated by analysts of the Chinese

economy and by some within the government. It comes amid indications that

economic growth, exports and various industries are slowing.