PBOC plans pilot programs to stabilize growth and attract investors

Chinese central bank will introduce diversified financial reform measures as pilot programs in five regions to stabilize economic growth while further open the domestic market to overseas investors.

The measures, focusing on financial innovation, are designed based on different development levels and regional economic characteristics, and the potential risks should be controlled, said Lu Lei, director of Research Bureau at the People's Bank of China.

Small and micro enterprises in Taizhou, Zhejiang province, are encouraged to raise fund in both the domestic and outboard multi-level capital markets, using financial instruments of short-term financing bills, medium-term notes, and cooperate bonds. Asset securitization products for small businesses will also be designed, said the official.

"New models of cross-border financing should be created,” said Lu at a news briefing on Friday.

The financial innovation pilot program in Jilin province, a major grain base, will focus on expanding credit by pledging rural residents' land usage right and house ownership. The target is to concentrate cultivated land resource and develop large-scale modern farm.

Meanwhile, Internet finance and agricultural insurance services will also be facilitated in the province, according to the PBOC.

In the free trade zones in Guangdong, Fujian and Tianjin, the financial reform will further support renminbi's usage in cross-border transactions. Enterprises in these regions will be allowed to borrow foreign debt. The measures will help to achieve capital account convertibility within certain limits.

Xing Yujing, a director of the PBOC Monetary Policy Department, said that financial reforms will continue to promote capital account convertibility after the International Monetary Fund included renminbi in its reserve currencies' basket, or the Special Drawing Rights basket.

"We never changed the direction of financial opening-up reforms,” said Xing at the same press conference.

As the internationalization of renminbi is deepening, the currency is widely used in global trade and investment, and no great financial risk has happened in China, providing favorable environment to push forward the market-oriented reform, according to Xing.

After an executive meeting of the State Council presided over by Premier Li Keqiang on Wednesday, a statement said that these pilot programs will be launched as soon as the policies are ready.

Li also said there pilot regions should report after one year to conclude the experience of financial innovation, and then successful examples will be expanded to other areas.