(Yicai) Sept. 2 -- The Chinese government will develop a working mechanism to promote private investment funds and factor guarantees, to enhance policies that promote private investment and to increase support for private investment projects, after private investment stopped growing in the first seven months.

The National Administration of Financial Regulation and the National Development and Reform Commission will study policies to promote the development of private investment and guide financial institutions such as banks and insurance companies to innovate financial products and services, according to the notice released by the two government departments together with the Ministry of Natural Resources and the Ministry of Ecology and Environment on Aug. 30.

Private investment grew 0 percent from January to July from a year earlier, according to data previously released by the National Bureau of Statistics.

And private investment dipped 0.6 percent in July from a year earlier, the lowest since September 2023, said Wen Bin, chief economist of Minsheng Bank.

Difficult and expensive financing has always been a big hurdle for private companies. The two departments will determine reasonable loan interest rates for private companies, strictly regulate the fees of all aspects of credit financing, continue to improve the financing facilitation of private investment projects and find solutions for financing difficulties and expensive financing problems for private enterprises, the notice said.

The establishment of a working mechanism to promote private investment funds and factor guarantees is a specific way of optimizing the private investment environment, which will help promote the stability and improvement of private investment, said Shi Ying, an associate researcher at the Institute of Economic System and Management of the National Development and Reform Commission.

By focusing on key areas such as the guarantee of funds and elements for private investment projects, the government will find solutions for problems such as the fact that private investors dare not invest, will not invest and are unable to invest, Shi said.

A list of key private investment projects will be sent to banks through the national online approval and supervision platform for investment projects, the National Development and Reform Commission said.

And the National Administration of Financial Regulation will also post it to other banks and insurance companies, asking them to independently review and select eligible projects to provide financing support according to market principals and the rule of law, it added.

The formulation of financing support policies to guide financial institutions to innovate financial products and services will help solve the long-term problems of difficult and expensive financing for private firms, said Yue Xiangyu, associate professor at the School of Economics of Shanghai University of Finance and Economics.

Sharing the list of key private investment projects with banks and insurance companies as well as strengthening targeted financing support can improve the possibility of private investment projects obtaining funds and provide a solid guarantee for the smooth progress of projects, Yue said.

Editor: Kim Taylor