(Yicai Global) Feb. 7 -- China's central bank and top banking regulator announced today that they plan to adjust the country's financial and monetary policies to help small- and mid-sized companies endure the coronavirus epidemic.
The reopening of China's financial markets on Feb. 3 showed the government's determination to safeguard the market and also demonstrated the maturity of the nation's financial markets, Pan Gongsheng, deputy governor of the People's Bank of China, said at a joint press conference held with the China Banking and Insurance Regulatory Commission.
The great adjustment in prices of mainland-traded equities and the onshore Chinese yuan were also consistent with expectations of a rebound, while maintaining stability in the near term, he added.
Meanwhile, cross-border capital flows and foreign exchange supply and demand remained basically stable, with foreign exchange reserves rising steadily in January, Pan noted. He expressed confidence that both China's stock market and foreign exchange market will continue run smoothly.
The simultaneous occurrence of the novel coronavirus and the Chinese New Year holiday has impacted the tourism, catering and other tertiary sectors, while the extended vacation period, along with the delayed start to work, will impact industrial production and the construction sector, which will further affect China's economic activities in the first quarter, according to Pan.
China's economy rebounded in the third quarter of 2003 following the outbreak of Severe Acute Respiratory Syndrome, or SARS, Pan recalled, adding that the consumption and investment postponed due to the coronavirus epidemic will be unleashed, and the economy will see a compensatory recovery.
Banks Can Cope
The new coronavirus outbreak has had some impact on small and micro firms, especially in the accommodation, tourism and catering sectors, Zhou Liang, vice chairman of the China Banking and Insurance Regulatory Commission, told reporters at the briefing. But overall, it will not be too large, he added.
Judging from the financial system operation, the CBIRC resolved non-performing assets worth CNY2.3 trillion (USD329.5 billion) last year, and micro and small firms accounted for a relatively small portion. Banks' provision coverage reached over 180 percent, which means they had adequate resources to cope with the rise in non-performing assets, Zhou said.
Pan noted that monetary, financial and tax policies need to be reformed and improved for micro and small firms that have little anti-risk capability, along with the policy environment and incentive and restraint mechanisms for commercial banks serving such companies.
According to Zhou, this year the focus will be on providing high-quality financial services for micro and small firms from four aspects: increasing supply, reducing prices, improving quality and expanding scope.
Editors: Zhang Yushuo, Peter Thomas