Chinese financial regulators have stepped up efforts to enhance support for private-sector enterprises through a series of new policies designed to increase lending to micro and small businesses. These initiatives target improved access to financing and aim to foster sustainable growth within the private economy.
In June, the Dalian branch of the National Financial Regulatory Administration (NFRA) introduced 17 measures focused on expanding financial services tailored to private businesses. The directives call on banks to integrate services supporting private enterprises into their strategic development plans, set clear lending goals, and adopt credit quota systems. Additional measures include delegating greater loan approval authority to frontline staff and incorporating performance incentives aligned with increased lending to private firms. The regulator also encourages financial institutions to innovate product offerings and enhance financing coordination, particularly benefiting micro and small enterprises through loan renewal programs that avoid principal repayment requirements. Efforts to eliminate illegal loan intermediaries are also a key component of the plan to alleviate financing hurdles.
Similar policy packages were rolled out by the Tianjin financial administration and other regional bodies last month, emphasizing a coordinated approach to target funding for private businesses. Tianjin’s measures include the use of relending programs, fiscal interest subsidies, and expanded financing guarantee policies. A notable element is the promotion of unsecured loans via a dedicated credit service platform, designed to reduce information asymmetries between banks and private companies. The Tianjin authorities have also committed to a risk compensation mechanism for first-time inclusive unsecured loans to micro and small enterprises, alongside ongoing efforts to strengthen government-backed financing guarantee systems and reduce overall financing costs for businesses.
In Jiangsu province, the NFRA office released a separate policy document comprising 16 measures aimed at increasing credit allocation to private enterprises by dismantling implicit discrimination and enhancing financial institutions’ capacity to serve the sector. The regulations emphasize the removal of hidden barriers, call for greater weight to be placed on private-sector lending in banks’ performance evaluations, and recommend increased tolerance for nonperforming loans. These steps seek to boost both the volume and growth rate of loans extended to private companies.
One example cited is a “little giant” technology company based in Nanjing, known for developing core technology for the video game Black Myth: Wukong. Despite holding 30 patents, the firm faced financing challenges due to insufficient collateral, which hindered commercializing its research. In response, China CITIC Bank’s Nanjing branch implemented an innovative credit assessment model leveraging factors such as research and development investment, patent holdings, and market potential to evaluate creditworthiness. This approach enabled the branch to provide a tailored 20 million yuan ($2.94 million) working capital loan. Additionally, the bank helped the company achieve a listing on China’s National Equities Exchange and Quotations Innovation Tier platform.
Experts highlight that the difficulties financial institutions encounter in accurately assessing credit risks tied to private enterprises diminish banks’ willingness to lend. Yang Haiping, a researcher at the Shanghai-based SIFL Institute, recommended increased government involvement in creating risk-sharing frameworks to alleviate credit risk concerns. Yang also urged banks to enhance risk management by adopting intelligent risk assessment models, innovating financial service structures such as industrial and supply chain finance, and implementing comprehensive controls over credit fund allocation through closed-loop management systems.