Premier Li meets the press: Full transcript of questions and answers

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Guangming Daily: Last year, the Central Bank cut required reserve ratio several times, lowering the costs of financial institutions. However, companies still feel there is difficulty in accessing affordable financing. And they have yet to feel the actual results of those policy adjustments. What measures will be adopted this year to ensure there will be better financial services for the real economy?

Premier Li: Serving the real economy is the bounden duty of the financial sector. However, there does exist the problem of inaccessible and expensive financing for the real economy, in particular, private businesses and small and micro companies. Last year, we took a number of steps to curb the fast rise in the financing cost faced by our companies. The Central Bank cut required reserve ratio four times to reduce costs for financial institutions, so that more money will flow to our private companies, and small and micro companies. This year, we will take a multi-pronged approach in this respect to significantly ameliorate this problem that is seriously constraining our economic development and the vitality of our market. Our goal is to further cut the financing cost for small and micro companies by another one percentage point this year.

As China takes its own initiative to further open up, we will adhere to the principle of competitive neutrality and treat both domestic and foreign-invested enterprises as equals. Likewise, we also need to treat all businesses under various types of ownership as equals. As far as lending is concerned, there do exist some problems and obstacles. We need to encourage financial institutions to enhance their internal management system and provide more services to private companies, and to small and micro firms, to lessen their financing cost and rein in arbitrary charges. When small and micro companies are vibrant, our economy will be full of life and energy. And there will be a stable employment situation.

In the meantime, we also need to forestall financial risks. No new loans will be made to zombie companies which are no longer solvent. And so-called financial activities that are illegal and non-compliant must be stopped and seriously dealt with. We are fully capable of forestalling systemic financial risks. Strengthening financial services and preventing financial risks are mutually reinforcing.

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