Major lenders chart faster steps in key areas and weak links, inject impetus into development

Major banks in China must get the pace of credit extensions right so that their credit policies will produce effects early on, further optimize their credit structures, and provide targeted support for key areas and weak links of national economic and social development, according to decisions made at a meeting held by China's central bank and its top banking and insurance regulator on Tuesday.

Large State-owned commercial banks in the country recently said they will stay focused on serving the real economy and expanding domestic demand this year and accelerate the establishment of a modern industrial system, as well as step up extensions of credit to micro and small enterprises, technological innovation and green development.

Industrial and Commercial Bank of China will expedite the innovation of consumer financial products and services to make such services more convenient for and accessible to customers.

As China's largest State-owned commercial lender by total assets, ICBC will increase the supply of money to the manufacturing sector, strategic emerging industries and the digital economy, proactively promote rural vitalization and the development of the energy and resources sectors, strengthen synergies by adopting policy-based and developmental financial instruments and continuously enhance financing for domestic investments while focusing on major projects outlined in China's 14th Five-Year Plan (2021-25).

China Construction Bank Corp will proactively explore affordable rental housing, urban renewal and funds to finance rental housing, and push for a steady transition of the real estate sector toward new development models.

At a meeting studying guiding principles of the annual Central Economic Work Conference, CCB said it will deepen supply-side structural reforms and strongly support the advanced manufacturing sector, low-carbon industries, construction of new types of infrastructure, the establishment of a new type of energy system, and the transformation and upgrading of traditional industries.

Bank of China will ramp up credit in key areas to support high-quality development of the real economy, support the upgrading of traditional industries and fostering of strategic emerging industries, help accelerate the construction of a modern industrial system and exploit its advantages of globalized operations to help better attract foreign investment.

BOC will boost consumer confidence by offering high-quality financial products and services to promote the expansion of domestic demand, meet reasonable financing demand and effectively prevent and mitigate risks associated with leading real estate developers.

Agricultural Bank of China insists on putting rural vitalization in a more prominent position, strengthening support for rural industries and rural construction, as well as consolidating and expanding the achievements in poverty alleviation.

Bank of Communications will further accelerate the optimization of its business structure and strategic transformation. In addition, it will ramp up efforts to promote breakthroughs and innovation in retail loans by giving full play to its home-field advantage in Shanghai.

Meanwhile, large State-owned commercial lenders stress that they will prioritize efforts ensuring timely delivery of presold homes, preventing and controlling risks faced by leading property developers and mitigating the risk of local government debts. It will also develop countermeasures for potential risks in key fields and make emergency response plans for risk disposal.

"China's banking sector should pursue consumption and investment with full force this year. The country must innovate products and services to meet reasonable financial demand derived from the consumption of bulk commodities and the rigid and upgraded demand for housing, tap the potential of consumption by seniors and promote better development of new types of consumption," said Lou Feipeng, senior economist at Postal Savings Bank of China.

"The country needs to provide credit support for the construction of major projects and the manufacturing and real estate sectors, as well as allow investment to effectively play a key role in optimizing the structure of supply," Lou said.

Apart from increasing total credit extensions according to the needs of economic development, banks should ramp up credit extensions to green development, technological innovation, privately owned small businesses and rural vitalization, with a focus on key fields and weak links in China's economic development, and promote the transformation and upgrading of the economic structure, he said.

Corporate loans, especially medium- and long-term loans, are expected to increase further as China has cut the reserve requirement ratio for banks and stepped up efforts in key fields such as infrastructure, manufacturing and real estate. The key lies in the implementation of supporting financing via policy-based and developmental financial instruments, said Wen Bin, chief economist at China Minsheng Banking Corp.

The current participation rate of banks in projects supported by policy-based and developmental financial instruments still needs to be boosted. Further efforts should be made to form the physical workload in the following months, Wen said.