INTERNATIONAL – China’s central bank will step up funding support for private firms including developing an equity financing tool, its chief, Yi Gang, said on Tuesday, the latest step to support a slowing economy pressured by a trade dispute with the United States.
China’s overall liquidity is ample but more effort is needed to channel cash to private firms and other parts of the economy where support is needed, Yi told the state-owned Economic Daily in an interview.
The People’s Bank of China (PBOC) has pumped out a net 2.3 trillion yuan ($332.60 billion) in liquidity this year by cutting banks’ reserve requirements four times, after offsetting maturing medium-term lending facility loans, Yi said.
But private firms, which account for 60 percent of China’s gross domestic product and 80 percent of urban jobs, remain cash-starved, he said.
“The problem of financing difficulties for private enterprises is particularly prominent, mainly because financial institutions’ risk-taking capacity is falling and they are unwilling to take risks,” Yi said.