SCIO briefing on work of supporting the development of micro, small and medium-sized enterprises and assisting self-employed business owners

The State Council Information Office held a press conference on Feb. 27 in Beijing to introduce the work supporting the development of micro, small and medium-sized enterprises and assisting self-employed business owners. February 28, 2020

Hu Kaihong:

Ladies and gentlemen, good afternoon. Welcome to this press conference organized by the Joint Prevention and Control Mechanism of the State Council. We have invited Zhang Kejian, vice minister of industry and information technology; Liu Guoqiang, vice governor of the People's Bank of China; Tang Jun, vice minister of the State Administration for Market Regulation; and Xiao Yuanqi, chief risk officer and spokesperson for the China Banking and Insurance Regulatory Commission (CBIRC). They will brief you on the work being done to support the development of micro, small and medium-sized enterprises (MSMEs) and assisting self-employed business owners. They will also take questions.

First, I will give the floor to Mr. Zhang. 

Zhang Kejian:

Ladies and gentlemen, friends from the media, good afternoon. small and medium-sized enterprises (SMEs) are the largest and most dynamic group of enterprises, an important part of the socialist market economy, and the key foundation of China's real economy. I just said that SMEs constitute the largest part of the market. But, how large it is? According to the fourth national economic census, there were a total of 18.07 million SMEs at the end of 2018, making up 99.8% of all legal entities. That is to say, the stability of SMEs will contribute to a sound economy.

The CPC Central Committee and the State Council attach great importance to mitigating the impact of COVID-19 on the operation of SMEs. General Secretary Xi Jinping emphasized that assistance should be extended to key industries and SMEs. Proactive policies should be formulated in advance to prevent enterprises from encountering difficulties and should be fully implemented with targeted measures. Premier Li Keqiang called for all regions and departments to establish special assistance mechanisms for enterprises, especially private enterprises and micro and small businesses, to help them overcome difficulties. According to decisions made on Feb. 25 at the State Council's executive meeting, financial institutions are being encouraged to provisionally defer loan payments and increase lending at concessional rates to MSMEs. Financial support for self-employed business owners should also be scaled up as part of efforts to help them counter the fallout from COVID-19 and ease their difficulties. 

The Ministry of Industry and Information Technology (MIIT) has implemented the decisions and deployments of the CPC Central Committee and the State Council and gives full play to the role of the leading group in promoting the development of SMEs as a coordinating office. Working with relevant authorities, we have analyzed the impact of the epidemic on SMEs and released a series of supporting policies including fiscal, tax-based and financial policies, as well as social security. For example, the Ministry of Finance has gradually lowered the value-added tax rate for small-scale taxpayers, and improved policies and measures such as entrepreneurship guarantee loans with discounted interest and financing guarantees. The National Development and Reform Commission (NDRC) lowered the price of electricity and gas for the companies in stages. The People's Bank of China took the lead by setting up 300 billion yuan of special re-lending loans related to epidemic prevention, and introduced loans with preferential interest rates in phases. CBIRC encourages financial institutions to provisionally defer loan payments and not rashly withdraw, cut off, or defer lending. The State Administration for Market Regulation has intensified its support for self-employed business owners. MIIT has proposed 20 measures in six aspects to help SMEs resume operation in an orderly manner. We have held conference calls and video conferences to discuss how to better help the resumption of operation and promoted the experiences to instruct the SMEs. 

A set of practical policies introduced recently have played an important role in alleviating the difficulties encountered by SMEs. We have seen progress in this regard. Statistics show that over 30% of SMEs have already resumed operation. In order to make the national and local policies readily available for these enterprises to check, we worked with to create a special page on the State Council app that provides information on policies for SMEs amid the COVID-19. In this way, SMEs can better understand the policies, and make full use and benefit from them. I would also like to take this opportunity to call on our media friends to help publicize this service.

Next, we will resolutely implement the decisions and deployments of the CPC Central Committee and the State Council and give full play to the role of inter-agency mechanisms at all levels to promote the development of SMEs. We will step up the implementation of policies, promote the resumption of operation in an orderly manner, and help deal with difficulties facing SMEs as they start getting back to business. With these measures, we will ensure that SMEs overcome their difficulties and enjoy steady development. Thank you.

Hu Kaihong:

Thank you Mr. Zhang. Now, let's give the floor to Mr. Liu, deputy governor of the People's Bank of China (PBOC).

Liu Guoqiang:

Facing severe challenges posed by the outbreak of COVID-19, the PBOC has firmly implemented the decisions and deployments of the CPC Central Committee and the State Council in coordinating epidemic prevention and control with social and economic development under the guidance of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era. With early response and swift actions, we are determined to contribute to the final victory of the war against the epidemic and sound economic and social development . 

We have taken a series of targeted and effective measures. First was to use targeted tools to guarantee supply. PBOC has launched a re-lending scheme of 300 billion yuan that will support financial institutions in providing prime-based loans to key enterprises combatting the epidemic. With discounted interest rates, the actual lending rate for enterprises is an average of 1.28 percent, which is lower than the rate of no more than 1.60 percent set by the State Council. Second was to keep liquidity reasonably ample. PBOC recently injected 1.7 trillion yuan of liquidity via short-term reverse repo operations on February 3-4, which was vital for maintaining market liquidity and a stable financial market following the Spring Festival holiday. The short-term liquidity has been withdrawn as the funds matured, and market liquidity has stayed reasonably ample. Third was to induce the overall interest rate downward. The interest rates of open market reverse repos and medium-term lending facilities (MLF) fell by 10 base points respectively. On Feb. 20, the one-year loan prime rate (LPR) and the five-year LPR fell by 10 and 5 base points respectively, driving the overall rate downward. Fourth was to actively interpret policies and make our voices heard. By releasing newsletters, taking interviews and publishing articles, we have analyzed the targets of our monetary policy and financial support for the outbreak prevention and control. We have taken the initiative to communicate with the media and market, setting forth our policy intentions and enhancing transparency. 

All these measures have ensured that the liquidity of the banking system has remained reasonably ample and the financial market is stable during such a critical time when the whole country is focusing on epidemic prevention and control. The money market interest rate has been lowered, and the seven-day interbank reverse repo rate has been kept at around 2.2 percent. The stock market has recovered from the losses it suffered since the Spring Festival holiday and the exchange rate of yuan to U.S. dollar has fluctuated bidirectionally around the level of seven. The policies and measures China has taken to combat the epidemic have been well received by the financial market and all aspects of the society. The International Monetary Fund, the World Bank, and international financial community have highly appreciated our efforts. It is widely believed that the impact of the epidemic is temporary and limited, the Chinese economy will continue to show its strong resilience, and the Chinese government has ample policy room to maintain stable economic growth.

Recently, PBOC promptly strengthened its credit support for the resumption of work and production of micro, small and medium-sized enterprises in accordance with the requirements of the State Council's executive meeting. Playing a key role in driving economic development and creating jobs, micro, small and medium-sized enterprises are of great importance to the orderly resumption of work and production nationwide and matter greatly to the realization of this year's targets of social and economic development. Now, these companies have difficulties in employment, resumption of work, or matching industrial chains. They are also under great pressure in financial terms. Providing appropriate preferential support to these enterprises is a good way to stimulate the vitality of real economy entities and promote the high-quality development of the economy. It will also help advance the sustainable development of finance and smooth the virtuous cycle of finance and economy.

First, we will maintain reasonably adequate liquidity. Tools such as the medium-term lending facility (MLF), open market operations (OMO) and standing lending facility (SLF) will be comprehensively applied to meet the liquidity demands of financial institutions in supporting the resumption of work and production, reducing financing costs and maintaining the smooth operation of the financial market. The monetary credit and growth of social funds will be guided to correspond to economic development, stabilize macroscopic leverage ratio and price levels, properly counteract short-term downward pressure on growth caused by the epidemic, and maintain a balance between steady growth and warding off risks.

Second, structural monetary policy tools will be used to increase support for SMEs in their resumption of work and production with the law-based principle of market orientation. The enterprise list system has been implemented for the first-phase special refinancing, and funds are being restricted to ensure that low-cost funds precisely and accurately flow to major enterprises securing supplies at the crucial stage of fight against the virus. A total of 500 billion yuan ($71 billion) was recently added for refinancing and rediscounting to inclusively support eligible enterprises in a market-oriented manner. The refinancing rate for agriculture and small business has also been reduced by a quarter of a percentage point, from 2.75% to 2.5% as an incentive.

Third, the financial system will ensure synergy and coordination, and guide banks to make loans at preferential interest rates according to different categories. National banks are characterized by low-cost and comprehensive sources of funds, and should play a leading role as recent falling interest rate shave effectively reduced the cost of offering bonds and negotiable certificates of deposit. Targeted cuts of required reserve ratios will be assessed for inclusively financing in the next phrase to release more funds. Policy banks should play an active role in stressing counter-cyclical adjustment and tackling areas of weaknesses. These banks will support SMEs in their resumption of work and production by increasing the total amount of lending, providing special lines of credit, and offering loans at preferential interest rates. Local corporate banks are the main forcein serving local business and supporting SMEs. The People's Bank of China will provide them with low-cost funds and help them solve problems such as limited sources of funds and expensive capital to guide them to make inclusive loans for SMEs in their resumption of work and production.

Next, the prudent monetary policy will place greater emphasis on flexibility and moderation, while support for the real economy's recovery will be prioritized. Monetary policies will provide positive support in the fight against the virus as well as real economic growth including stabilizing expectations, expanding loan amounts, supporting according to different categories, giving emphasis to extensions, creating new tools and effectively implementing guidelines to minimize the impact of the epidemic on the economy and fulfilling the socio-economic goals for this year.  

Hu Kaihong:

Thank you, Mr. Liu. Now, I'll give the floor to Mr. Xiao Yuanqi.

Xiao Yuanqi:

Good afternoon, friends from media. Since the outbreak, CBIRC has firmly implemented the important instructions made by General Secretary Xi Jinping, and under the guidance of the CPC Central Committee and the State Council, made overall arrangements in financial service work for prevention and control of the epidemic, as well as socio-economic development. It has especially increased financial support for SMEs in their resumption of work and production in order to counter the virus epidemic and win the people's war and also total warfare.

First, the CBIRC has offered greater credit support for industries involved in epidemic prevention and control. CBIRC encourages banks and insurance institutions to endeavor to finance enterprises in areas such as health and disease prevention, the production and procurement of medical products, as well as the construction of public health infrastructure. CBIRC supports financial institutions to make full use of the special low-cost refinancing facility to provide preferential interest rate credit support. As of Feb. 26, loans issued to firms engaged in containing the novel coronavirus outbreak totaled over 953 billion yuan (about 135.8 billion U.S. dollars).

Second, the CBIRC has provided differentiated preferential financial services to hard-hit regions, enterprises and individuals. CBIRC encourages financial institutions to defer loan payments to a certain extent, lower lending rates, and provide more credit loans and medium- and long-term loans, as part of the effort to help relevant companies overcome temporary difficulties caused by the COVID-19 outbreak. Some banks have investigated the business involving existing line of credit in Hubei province, extending or renewing loans automatically for affected companies. Credit card centers of some banks have also deferred repayments for affected individuals. In addition, banks and insurers have fulfilled their corporate social responsibility and earnestly made donations to support virus-hit regions, the amount of which exceeded 2.5 billion yuan.

Third, the CBIRC has offered greater credit support for private as well as micro and small-sized enterprises. CBIRC has offered guidance for financial institutions to optimize the allocation of their internal resources, improve their incentive mechanisms, and strengthen the capacity-building of services. Greater efforts will be given to private, micro and small-sized enterprises to maintain reasonable loan growth. For inclusive small- and micro-enterprises in Hubei province, the lending rate has been slashed by 0.5 percentage points.

Fourth, the CBIRC has been giving full play to insurance institutions regarding their role in risk management and protection. CBIRC has guided insurers in setting up a "green channel" for the settlement of insurance claims, with priority being given to those infected by COVID-19 or those experiencing epidemic-related losses. For vehicles of logistic companies involved in epidemic prevention and control, as well as those affected by the epidemic and unable to pay the insurance premiums, their payment will be deferred to a certain extent. We support insurers in the donation of insurance to frontline medical staff as well as those engaged in disease control, so as to allay their worries. So far, over 15.7 trillion yuan of insurance has been donated to frontline workers by insurers, and the special COVID-19 insurance claim settlement fund has exceeded 76 million yuan.

Fifth, the CBIRC has worked to provide innovative financial services and improve the efficiency of its services. CBIRC urges banks and insurance institutions to conduct business according to urgency and importance, and improve the efficiency of financial services concerning epidemic prevention and control. As many companies and individuals used to travel to the office buildings for financial services, there is currently a growing need for online business via mobile banking, online banking and internet finance. As such, banks and insurance institutions should work to develop a comprehensive, stable and safe system accordingly. They should also provide financial services via video chat for clients who are unfamiliar with mobile apps, especially middle-aged and elderly customers. Nevertheless, it these customers do need to come to the office building for face-to-face financial services, banks and insurance institutions should carry out security and disinfection efforts and ensure these customers are not affected by the epidemic.

Next, the CBIRC will resolutely implement the deployments of the CPC Central Committee and the State Council. CBIRC will coordinate the epidemic prevention and control and the financial works concerning China's economic growth and social development, improving the accuracy, timeliness, as well as efficiency of financial services. At the same time, CBIRC will spare no effort in working to avoid systematic financial risks.

Hu Kaihong:

Thank you, Mr. Xiao. Next, let's give the floor to Mr. Tang.

Tang Jun:

Good afternoon, everyone. Following the policy decisions and deployments of the CPC Central Committee and the State Council, the State Administration for Market Regulation, together with other relevant departments, has recently put forward policy proposals on helping self-employed business owners mitigate against the impact of the epidemic. These proposals have been studied and approved by the State Council. I would like to introduce relevant considerations and major policy measures and then take any questions you might have.

The self-employed and private business economy is highly valued by the CPC Central Committee and the State Council. General Secretary Xi Jinping pointed out that this economy plays an important role in maintaining steady growth, promoting innovation, increasing jobs and improving people's livelihoods. Premier Li Keqiang stressed that we should step up efforts in formulating relevant policies to help self-employed business owners so as to ensure employment. To implement the important instructions of General Secretary Xi Jinping on coordinating epidemic prevention and control with economic and social development, the State Council executive meeting made a plan on Feb. 25 to support self-employed business owners in accelerating their resumption of work and production while effectively preventing and controlling the epidemic.

Self-employed business owners play an important role in the prosperity of the market economy and the expansion of employment. So far, a total of 83.31 million self-employed business owners have been registered in China, contributing more than 200 million jobs. However, the production and operation of self-employed business owners has been hit hard by the epidemic. At present, it is extremely important in terms of employment and people's livelihoods to help self-employed business owners solve their practical difficulties and resume work and production in an orderly manner as soon as possible.

The State Council executive meeting has taken a problem-oriented approach to release a series of supportive measures on the principles of the market and rule of law. 

First, we will strive to help self-employed business owners resume work and production in an orderly manner as soon as possible. Following the requirements for a targeted resumption based on different regions and levels, we will promote an orderly resumption of work and production by self-employed business owners depending on their business forms and take measures to guarantee their labor and logistical needs.

Second, we will cut the operation costs of self-employed business owners. We will increase the targeted support of low-interest loans, reduce or defer employers' social insurance contributions, implement a policy of reducing or exempting value-added tax, and reduce or cancel fees for inspection, testing, certification and recognition for self-employed business owners. We will also encourage local authorities to reduce or exempt rent payment for self-employed business owners based on the actual conditions.

Third, we will facilitate self-employed business owners' access to the market. We will provide convenient and efficient services to these businesses so as to further release resources of business sites and exempt them from registration in accordance with the law.

Fourth, we will offer more services to self-employed business owners. We will ensure electricity and gas supplies to businesses that are having difficulty paying fees, which will provisionally reduce their electricity and gas costs. We will give play to the supporting role of associations such as the federations of industry and commerce, and the association of individually-owned businesses as well as internet platforms.

Next, the State Administration for Market Regulation, together with relevant departments, will strengthen guidance and encourage local authorities to take specific measures depending on their actual conditions to ensure that policies are implemented. We will enhance publicity and interpretation of policies to make them widely known to self-employed business owners and ensure they enjoy the benefits. Local market regulators are encouraged to take the initiative in their services to help self-employed business owners resume work and production in an orderly manner as soon as possible.

Thank you.

Hu Kaihong:

Thank you, Mr. Tang. Now the floor is open for questions. Please identify your media outlet before asking your questions.

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