China moved on Tuesday to avoid harsh, unintended effects of its economic cooling policies, with a top regulator and an influential newspaper saying banks should not restrict lending so much that they sent companies broke.
Bank regulator Liu Mingkang told banks to take a "differentiated approach" in tightening credit and to boost support to private firms.
Legitimate needs for capital should be met, even for companies in potentially overheated sectors such as steel and cement, the China Daily newspaper quoted Liu, head of the China Banking Regulatory Commission, as saying.
The government has been trying since last year to slow the economy, which has shown signs of widespread speculative investment that could go bad, turning the boom into a bust.
Authorities have required banks to keep more money in reserve, making less available for lending. Banks have also been told to restrict lending specifically to sectors that have seemed especially hot - such as those making steel, building materials and motor vehicles.
The official China Securities Journal joined Liu on Tuesday in criticising excessively restrictive lending.
The central government had intended only to target the overheating segments of the economy, but some banks had resorted to a simplistic "one knife cuts all" approach, tightening loans for all enterprises, the newspaper said in a front-page commentary.
It pointed to the failure of one formerly high-flying company, conglomerate Xinjiang Delong, as an example of the problem.
"The collapse of Delong and related firms have delivered a prompt message that macroeconomic controls have strained enterprises' capital," said the newspaper, one of China's most influential financial publications and run by the official Xinhua news agency.
China's softer-than-expected economic growth of 9.6 percent in the year through the second quarter has lifted hopes that the measures would bring about a soft landing, although analysts do not expect an imminent easing of cooling policies.
Comments
Comments are closed.