CFIC Introduction
Industry insiders generally believe that the establishment of re-loans for scientific and technological innovation and technological transformation will help guide financial institutions to provide credit support to technology-based small and medium-sized enterprises in the start-up and growth period, as well as digital, intelligent, high-end and green technological transformation and equipment renewal projects in key areas under the premise of independent decision-making and risk-bearing.
On April 7, the People's Bank of China set up a re-loan for scientific and technological innovation and technological transformation to encourage and guide financial institutions to increase financial support for small and medium-sized scientific and technological enterprises, technological transformation and equipment renewal projects in key areas. Industry insiders generally believe that the establishment of re-loans for scientific and technological innovation and technological transformation will help guide financial institutions to provide credit support to technology-based small and medium-sized enterprises in the start-up and growth period, as well as digital, intelligent, high-end and green technological transformation and equipment renewal projects in key areas under the premise of independent decision-making and risk-bearing. The quota of 500 billion yuan interest rate is 1.75% Policy continuation to support scientific and technological innovation and technological transformation The People's Bank of China pointed out that the relending of scientific and technological innovation and technological transformation is the continuation of the policy of the original scientific and technological innovation relending and equipment renovation special reloan, and reform and improvement on the basis of summarizing the experience of the two tools, support financial institutions to improve the quality and efficiency of financial services, and better meet the financing needs in the fields of scientific and technological innovation, technological transformation and equipment renewal. In April 2022, the People's Bank of China created a re-loan for scientific and technological innovation to guide financial institutions to increase their support for scientific and technological innovation; in September 2022, the People's Bank of China created a special re-loan for equipment renovation to support equipment renewal and transformation in manufacturing and other fields. The above two refinancing lines are both 200 billion yuan, open to 21 major banks, with an interest rate of 1.75% and a maximum maturity of 3 years after extension. According to the news released by the People's Bank of China on the 7th, the reloan amount for scientific and technological innovation and technological transformation is 500 billion yuan, the interest rate is 1.75%, the term is 1 year, and it can be extended twice, and the extension period is 1 year each time. The recipients include 21 financial institutions, including China Development Bank, policy banks, state-owned commercial banks, Postal Savings Bank of China, and joint-stock commercial banks. "The newly established re-lending objects, interest rates and terms for scientific and technological innovation and technological transformation are consistent with the original two special re-loans, with a quota of 500 billion yuan, an increase of 100 billion yuan compared with the sum of the two special re-loans (400 billion yuan). Dong Ximiao, chief researcher of Zhaolian, analyzed that the re-lending interest rate for scientific and technological innovation and technological transformation is 1.75%, which provides financial institutions with low-cost stable funds, which will help guide financial institutions to increase support services for scientific and technological innovation and technology-based enterprises, better do a good job in science and technology finance, and leverage more social capital to invest in scientific and technological innovation. At the same time, it will also help support financial institutions to implement the decisions and arrangements of the executive meeting of the State Council on promoting a new round of large-scale equipment renewal and trade-in of consumer goods. Liang Si, a researcher at the Bank of China Research Institute, said that from the announcement of the plan, the interest rate on refinancing funds for scientific and technological innovation and technological transformation is lower than that of the one-year MLF, which is attractive to financial institutions, which can encourage financial institutions to increase financial support in related fields by reducing the cost of funds for financial institutions and then reducing the cost of funds for specific entities. At the same time, the issuance of re-loans to financial institutions at 60% of the loan principal can essentially play a leverage effect, and can amplify the scale of financial support provided by financial institutions to technology-based enterprises and special projects. Ming Ming, chief economist of CITIC Securities, said that the establishment of scientific and technological innovation and technological transformation re-lending will encourage and guide financial institutions to increase financial support for small and medium-sized technology-based enterprises, technological transformation and equipment renewal projects in key areas, which is expected to stimulate the financing demand of related industries. In addition, refinancing can be used to release base money into the market, which is expected to promote the recovery of social financing growth. In terms of the implementation of re-lending for scientific and technological innovation and technological transformation, financial institutions make their own decisions on whether to issue loans and the conditions for granting loans in accordance with the application of enterprises, referring to the list of alternative enterprises and projects provided by the competent authorities of the industry, and in accordance with the principle of bearing their own risks. Financial institutions apply to the People's Bank of China for re-lending, and the People's Bank of China reviews the loan ledger and issues re-loans to the financial institution at 60% of the loan principal for loans that meet the requirements in the list of alternative enterprises or projects. Dong Ximiao pointed out that after the financial institutions refer to the list of alternative enterprises and the list of projects, and make independent decisions to issue loans to business entities, the People's Bank of China will give re-lending financial support to the loans that meet the requirements according to the application of financial institutions, and organically combine the market-oriented principle with policy support, which will further improve the enthusiasm of financial institutions to support service scientific and technological innovation and large-scale equipment renewal under the premise of preventing risks. Looking ahead, Dong Ximiao suggested that the re-lending policy should be optimized, and high-quality small and medium-sized banks could be considered as the target of issuance, so as to better support small and medium-sized banks to give full play to the characteristics of flexible systems and mechanisms, do a good job in science and technology finance, and maintain a more stable development in serving small and medium-sized technology-based enterprises. At the same time, the cycle of scientific and technological innovation is long and uncertain is high, so it is recommended to appropriately extend the term of refinancing for scientific and technological innovation and technological transformation, or increase the number of extensions, so as to better match the actual needs of the development of science and technology finance. Liang Si pointed out that after the economy shifted to a stage of high-quality development, the mainland's monetary policy adhered to the regulation and control idea of paying equal attention to aggregate + structure, and continued to create a number of structural monetary policy tools to support the development of key areas and weak links. As of the end of 2023, the mainland has created a total of 17 structural monetary policy instruments, with a total balance of about 7.51 trillion yuan, of which 10 are in existence and 7 are due. "Structural monetary policy tools are conducive to combining macro policies and industrial policy guidance, increasing capital investment in key areas and weak links of the real economy, helping to cultivate macroeconomic ballast, propeller and growth pole, and empowering high-quality development. Jones Lang LaSalle Greater China Chief Economist and Research Director Pang Ming said that in the future, it is necessary to make good use of structural policy tools such as scientific and technological innovation and technological transformation re-lending, inclusive pension special re-lending, so that structural tools can not only achieve targeted and precise support, but also promote the reasonable expansion of the total amount, balanced credit delivery, and stable prices, and strengthen policy tool innovation and policy coordination under the premise of adhering to systematic thinking, and accelerate the cultivation of new growth momentum. "For the sake of stabilizing liquidity and precisely improving the financial services of relevant entities, we believe that relending is more appropriate at this point in time. Ming Ming said that relending is one of the traditional monetary policy tools, and its functions are gradually enriched, so as to better play the role of the central bank in guiding the flow of funds and adjusting the credit structure. Judging from the implementation of relending since 2020, the increase in relending quota has an immediate effect on the stimulation of loan issuance, and at the same time effectively reduces the financing cost of real enterprises. According to Ming Ming's analysis, compared with the direct issuance of loans by banks, the biggest feature of re-lending is that it ensures the directness, accuracy and effectiveness of the financial institutions' support entities. In addition, compared with ordinary loans, relending can also release base money through the People's Bank of China, which can play a role in regulating money supply. At the same time, it will reduce the capital occupation of banks, reduce the cost of funds, and allow banks to retain credit lines to continue to support key areas.
Source of this article: Xinhua Finance
Authors: Liu Yulong, Zhai Zhuo
WeChat editor: Wang Ziqing
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