Bank credit extensions boost real economy

Chinese banks have stepped up the pace of credit extensions since the beginning of the year as the banking sector further strengthened efforts to bolster the real economy, experts said.

This year, many banks used up their lending quotas for January during the first 10 days of the month, thanks in part to the early arrival of the weeklong Lunar New Year holiday, said Liao Zhiming, chief banking analyst at China Merchants Securities Co.

It is estimated that new yuan loans may reach around 4 trillion yuan ($590 billion) in January, considering that banks improved their project pipelines in the fourth quarter of last year. The amount of new yuan loans is expected to be similar to that in January 2022, which was 3.98 trillion yuan, Liao said.

Before the Lunar New Year holiday, Ni Jun, a banking analyst with GF Securities, led his team to conduct research on the business conditions of China's six largest State-owned commercial lenders by assets in 2023. The research found that these banks had seen a noticeable improvement in their corporate banking business and had gotten off to a good start this year in terms of credit extension.

According to many bank work plans for 2023, loans will mainly flow to key areas of the economy, including the manufacturing, consumption and real estate sectors.

Bank of China's branch in Changzhou, Jiangsu province, extended a four-year, 60 million yuan loan to Changzhou Houde Renewable Resources Technology Co Ltd, a high-tech company specializing in the harmless treatment and recycling use of organic resin waste, at an interest rate of 3.2 percent, with the assistance of a relending facility launched by China's central bank to support equipment upgrades and renovations.

The actual cost of borrowing for the company was 0.7 percent as the central government will offer loan discount subsidies at a discount rate of 2.5 percent.

A senior executive of the company said the loan boosted the firm's confidence in further improving its capabilities in production and technology development.

BOC, a large State-owned commercial lender, has also provided cross-border financial services to more than 45 trade delegations made up of nearly 800 foreign trade companies since November while the delegations, organized by local governments, traveled overseas to obtain orders and investments. During this period, BOC helped the companies win orders and investments, with a total value of more than 10 billion yuan.

China CITIC Bank, a joint-stock commercial lender, developed special measures in terms of credit approval, loan pricing and performance appraisal to encourage its employees to promote lending to the manufacturing sector.

Based on the policies of its head office and an action plan bolstering investment in and financing for advanced manufacturing in Shandong province, China CITIC Bank's branch in Jinan, Shandong, opened a green passage for credit approval for Jinan Senfeng Laser Technology Co Ltd, one of the national-level "little giant "enterprises.

"Little giant" enterprises refer to leading small and medium-sized enterprises that specialize in niche sectors, command a high market share, and boast strong innovative capacity and core technologies.

It took only five working days for China CITIC Bank to extend a six-year, 20.7 million yuan loan to the company before the Lunar New Year holiday at a preferential interest rate.

"The inflow of financial capital will give strong support to the production capacity enhancement of our company, ensuring our capabilities in doing research and further developing new types of products, developing new functions and expanding our laser application ability in the downstream laser industry," said Sun Fenghe, finance director of Senfeng.