Chinese banks should further cut fees and increase lending to small and micro enterprises to foster domestic restructuring, Premier Li Keqiang said on April 17 in Beijing at a meeting with top executives of major Chinese banks.
Premier Li inspected China Development Bank, a key policy bank, and Industrial and Commercial Bank of China, the country’s largest commercial bank, before hosting the meeting together with Vice-Premier Ma Kai and State Councilor Yang Jing in ICBC.
Premier Li urged CDB to increase its support for the shanty town renovation project, including underground pipe networks; railway construction in the central and western regions; water conservancy works; and information infrastructure projects.
Premier Li’s big concern with ICBC is the bank’s lending to small and micro enterprises. ICBC loaned about 161.3 billion yuan ($26.89 billion) to small and micro enterprises last year; and Jiang Jianqing, president of ICBC, predicted the figure will drop to about 140 billion yuan this year.
“Supporting them will generate sustainable vitality in the real economy, and create enough jobs,” Premier Li said. “There could be some favorable policies, or even financial support from the government when necessary, for the banks’ lending to small and micro enterprises.”
Jiang said his bank had cancelled all fees related to small and micro enterprises’ lending but Premier Li said: “That’s not enough. The banks should further cut fees in other services to relieve the burden on small businesses. And helping the real economy is in line with the interests of the banks.”
Employment is an important parameter of the economy’s health that Premier Li attaches great importance to, the other being the growth of people’s disposable income.
In the meeting, Premier Li shared his views on the banking industry’s role during the transitional stage of the economy.
“The real economy is like the body, and the finance sector is like blood,” Premier Li said. “The problem with Chinese finance sector is not anemia, but poor blood circulation.”
“We will not apply the ‘flooding irrigation’ model of stimulus policies,” said the Premier. “We have plenty of tools to realize efficient, well-targeted macro controls, and the use of the tools should be based on the practical conditions of the finance sector and the economy.”
The banks should make good use of their funds through more initiatives and innovations based on the Internet, increase the efficiency of financial services in supporting infrastructure construction, and the development of service sectors, agricultural industries, as well as China’s outbound development strategies, so as to offset the negative influence of growing uncertainties at home and abroad, said the Premier.
“In a flying-geese development model, China should align the head geese’s advanced technology and equipment closely with the following geese’s markets and needs with financial services,” said Premier Li. “The three-party cooperation benefits the global recovery.”