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China to speed up development of financing guarantee industry

Updated: Jul 31,2015 9:41 PM

A State Council executive meeting presided over by Premier Li Keqiang on July 31 decided to speed up the reform and development of the financing guarantee industry and establish a unified public resource trading platform, in a bid to enable the financial industry to better serve the real economy and create a transparent and effective distribution of resources.

The meeting noted that with the market-driven principle and supporting government measures, it is important to speed up the development of the financing guarantee industry, deepen financial reform, tackle the financing difficulties of small and micro businesses and issues related with agriculture, farmers and rural areas, which will help to promote mass entrepreneurship and innovation, vitalize the real economy, and enhance the national economy.

First, the government will explore the establishment of a sustainable cooperation mode that involves the government, banks, and financing guarantee institutions and encourage eligible local governments to set up governmental guarantee funds which can offer reasonable compensation for the risks of guaranteed loans of banks

Second, the government will set up a national financing guarantee fund to enable a nationwide service of government-funded provincial re-guarantee institutions in three years to diversify the risks together with financing guarantee institutions.

Third, the government will develop a batch of provincial and prefecture-level governmental financing guarantee institutions which are well-managed, enjoy good reputations and focus on serving small and micro businesses and issues related with agriculture, farmers and rural areas. The government will also support mergers and reorganizing of financing guarantee institutions for better management and services.

Fourth, to protect the legitimate rights and interests of financing guarantee institutions, the government will strengthen financial support, exempt business tax, and provide pre-tax deduction of reserve funds.

Fifth, government-backed financing guarantee agencies and re-guarantee agencies will not be required to seek profit or are allowed to reduce profit. Higher risks for loans for small and micro enterprises and for loans used for rural development will be accepted. Efforts need to be made to reduce guarantee fees. Long-term mechanisms should be established to standardize loan guarantee so as to prevent financial risks. Financing guarantee should play a bigger role in lessening enterprises and farmers’ burden and boosting business startups and innovation.

The country plans to build integrated, up-to-standard platforms for bidding, government procurement and other deals of public resources in a latest move to scale up the national anti-corruption drive, according to the meeting.

The meeting decided to integrate the current scattered and unsystematic platforms for construction projects bidding, transfer of land using rights, mining rights and State-owned properties as well as government procurement projects by the end of June 2016.

An “up-to-standard, open, transparent and efficient” nationwide platform is to be built up by the end of June 2017 to form an integrated public resources exchange market, a statement released after the meeting said.

The statement said the building of integrated platforms will be beneficial to cut bureaucracy, improve efficiency and prevent corruption.