China’s c.bank launches US$28 billion credit facility to support equipment upgrades

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BEIJING, Sept 28 (Reuters) – China’s central bank said on Wednesday it had set up a more than 200 billion yuan ($27.59 billion) lending facility to help manufacturers and other businesses upgrade their equipment , as part of a push to revive slacking demand .

The People’s Bank of China (PBOC) said in a statement that it will provide low-cost funds to financial institutions and guide them to lend to companies to support such upgrades.

The loans will be issued monthly and the interest rate for qualifying companies will not exceed 3.2% from September 1, 2022 to December 31, 2022, the central bank added. China’s one-year policy rate (LPR) is currently 3.65%.

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The credit facility will support sectors such as education, health, culture, tourism and sports, electric vehicle chargers, city subway facilities, new infrastructure and industrial digital transformation, the central bank said.

The PBOC has increasingly relied on structural or targeted policy tools, including low-cost borrowing, to support the slowing economy as it has limited scope for interest rate cuts for fear of fueling capital flight and fueling inflation.

The PBOC has established new facilities to support the transport, logistics and warehousing sectors hard hit by COVID-19, as well as carbon emission reduction, technical innovation and elderly care.

On Sept. 14, China’s cabinet announced steps to support equipment upgrades by businesses and expanded a series of measures to bolster the COVID-ravaged economy.

($1 = 7.2486 Chinese Renminbi Yuan)

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Reporting by Kevin Yao; Edited by Andrew Heavens and Kim Coghill

Our standards: The Thomson Reuters Trust Principles.

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