Beijing tells banks to lend more to small business as economy slows even before US tariffs start to bite
Financial agency says system needs to ‘create new dynamism’ for growth as it tries to head off risks to jobs and economy from trade war with Washington
The government financial committee led by Vice-Premier Liu He has ordered China’s banks to lend more to small business as Beijing tries to head off growing risks to jobs and growth from a trade war with Washington.
After its second meeting under Liu, the Financial Stability and Development Committee – the agency in charge of coordinating financial policies – said the system needed to “create new dynamism” for growth and that banks must improve their internal mechanisms to encourage lending to small business, according to a statement on Friday.
While small businesses are vital to employment, they are also vulnerable to external shocks. The latest purchasing managers’ survey published by Caixin magazine on Friday showed that growth in the service sector, which contributed about 60 per cent of China’s economic growth last year, slowed further in July. The outlook for the economy among Chinese managers fell to its lowest level in almost three years – even before US tariffs on Chinese exports started to bite.
The purchasing managers’ survey showed manufacturing activity also eased in July, painting an increasingly gloomy picture for the world’s second biggest economy down the track after it recorded 6.7 per cent growth in the second quarter.
