BEIJING, June 11 China has promised its
exporters a suite of currency and credit measures that include
cheaper loans and more tools to reduce foreign exchange risks to
help them combat sluggish sales.
The broad sweep of policy steps announced by the Chinese
central bank on Wednesday is aimed at supporting China's cooling
export sector, a pivotal employer in the country but which has
seen average monthly growth fall by two-thirds since 2007.
This is the second time in two months that China has given a
hand to its struggling exporters. Last month, the government
offered tax breaks, credit insurance and other benefits to the
sector, some of which overlap with latest announcement.
Most of the measures unveiled on Wednesday are intended to
lower companies' costs, be it borrowing costs, or transaction
and financial costs incurred when dealing with foreign exchange.
To reduce firms' cost of financing, the People's Bank of
China said it would support any qualified, non-financial company
that raises cash by selling bonds, bills or notes.
The Export-Import Bank of China, a non-commercial
bank whose goal is to reinforce state policy, will also increase
loans disbursed at favourable rates to Chinese exporters with
The procedures for settling cross-border deals denominated
in yuan and which pertain either to trade or direct outbound
investment will also be simplified, the central bank said.
And given China's long-term goal of gradually reducing its
interference with the yuan's value such that it is largely
decided by financial markets, authorities will attempt to help
companies cope with rising foreign exchange volatility.
More currency forwards, futures and options will be
developed, and the bar faced by banks when dealing with foreign
exchange derivatives will be lowered, the central bank said.
At the same time, it reiterated its policy that it will
slowly increase the extent to which the yuan can fluctuate
according to market demand and supply, whilst ensuring that it
stays at a "basically stable" level.
For companies that wish to expand abroad, the central bank
also pledged assistance. More financial services will be given
to companies involved in overseas mergers and acquisitions, such
as loans or syndicated loans.
More yuan-denominated funds that specialise in overseas
investments and merger and acquisition deals will also be
created, the central bank said.
(Reporting by Koh Gui Qing; Editing by Toby Chopra)