China's Central Bank Offers Banks More Funds For Lending To Indebted Firms

China's central bank will provide 300 billion yuan ($46.4 billion) of low-cost funding to banks to help them offer more support to small and medium-sized companies, Tom Hancock reported for Bloomberg News.

Photo Insert: The People's Bank of China

The offer comes as Beijing seeks to cushion its economy against a growth slowdown due to higher fuel prices, low demand, skyrocketing prices of raw materials as well as the demand of the central government not to raise prices, with smaller companies serving the domestic market absorbing the costs.

China’s central bank said it will provide 300 billion yuan ($46.4 billion) of low-cost funding to banks to help them offer more support to small and medium-sized companies.

The People’s Bank of China (PBOC) has also been tasked to spur domestic demand after noting that foreign buyers are cutting back on purchases from China, which for several decades has been tagged as the world’s factory.

The funding will be offered to banks via the People’s Bank of China’s re-lending facility this year, state broadcaster CCTV reported, citing a State Council meeting chaired by Premier Li Keqiang. The cabinet also mentioned using the PBOC’s rediscounting facility as part of the effort to aid smaller firms.

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