China is expected to take significant and coordinated steps to facilitate the financing of private businesses as their role in innovation becomes increasingly significant, signaled by the latest symposium between top financial regulators and private enterprises, policy observers and executives said.
Apart from extending loan support to the private sector, they also stressed the urgency of encouraging government-backed funds to invest in innovation-oriented privately owned startups, making financing via the stock and bond markets more accessible, and expediting the development of supply chain finance.
They made the comments as the People's Bank of China, the country's central bank, together with other top regulators, convened a symposium on Friday to discuss measures for boosting private enterprises' high-quality development and vowing to help the private sector "grow stronger, better and bigger".
The meeting, jointly convened by the PBOC, All-China Federation of Industry and Commerce, National Financial Regulatory Administration, China Securities Regulatory Commission and State Administration of Foreign Exchange, stressed supporting the private sector as an inherent priority for financial services and a manifestation of upholding the political and people-centered nature of financial work.
Analysts said it is not the first time for the central bank to convene symposiums on supporting private enterprises, with similar meetings held in 2018 and 2023, for instance. Friday's meeting, however, featured wide participation by various authorities, indicating that all-out, coordinated efforts to strengthen financial support for private enterprises are underway.
"Private and small businesses, known for their flexible structures, play a crucial role in driving technological innovation," said Lou Feipeng, a researcher at Postal Savings Bank of China, emphasizing the need for stronger financial support for the private sector amid the latest wave of technological revolution.
In terms of direct financing, eligible private enterprises should be supported in raising funds through bond issuances and IPOs, Lou said. On the indirect financing front, banks should improve first-time loan services for private businesses, expand access to credit-based lending, implement loan renewals without principal repayment and develop supply chain finance.
Tian Xuan, head of Tsinghua University's National Institute of Financial Research, said it is important to deepen reforms in the primary market to encourage investment by State-backed institutions in tech-driven startups, extend evaluation periods for their investment performance and enhance tolerance of their investment failures.
"With the US administration intensifying restrictions on investments in Chinese companies, State-backed investment funds and State-owned enterprises are increasingly filling the gap left by the exit of US venture capital," Tian said.
Echoing Tian's remarks, Song Qing, president of Baheal Pharma Group, said the symposium has bolstered the confidence of private enterprises like itself, which has established investment funds worth billions of yuan that were invested in innovative projects across artificial heart, radiotherapy equipment and nuclear medicine drug sectors.
"We hope to attract more municipal and national-level funds to work together and provide strong financial support for innovative enterprises in the healthcare sector, while leveraging favorable capital market policies to facilitate our invested sci-tech companies going public," Song said.
The symposium emphasized strengthening bond market innovation and reaffirming boosting private enterprise financing through capital markets — including support for tech-driven firms, mergers and acquisitions, and industrial upgrades.
The meeting also called for good use of structural monetary policy tools, increased credit access for private and small businesses, equal treatment of all ownership types by financial institutions, improvements to credit enhancement systems for smaller businesses and accelerated rollouts of supply chain finance regulations.
Xia Hua, chairman of fashion and apparel company Eve Group and an attendee at the symposium, suggested that financial institutions better meet private businesses' funding needs in areas such as technological upgrading and intelligent manufacturing in order to foster their innovative development.
It is also advisable for financial institutions to introduce convenient supply chain financial services to drive the collective digitalization of enterprises throughout the industrial chain, Xia said.
As of the end of 2024, China's outstanding loans to technology-oriented small and medium-sized enterprises surged by 21.2 percent year-on-year. The issuance of bills specializing in supporting sci-tech innovation in the interbank market exceeded 604.2 billion yuan ($82.9 billion) last year, up 49 percent year-on-year, the PBOC said.
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