Skip to main content
The Globe and Mail
Support Quality Journalism
The Globe and Mail
First Access to Latest
Investment News
Collection of curated
e-books and guides
Inform your decisions via
Globe Investor Tools
Just$1.99
per week
for first 24 weeks

Enjoy unlimited digital access
Enjoy Unlimited Digital Access
Get full access to globeandmail.com
Just $1.99 per week for the first 24 weeks
Just $1.99 per week for the first 24 weeks
var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(select.open)}function setPanelState(o){dom.root.classList[o?"add":"remove"](select.open),dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){window.requestAnimationFrame(function() {var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))});}pencilInit(".js-sub-pencil",!1); // via darwin-bg var slideIndex = 0; carousel(); function carousel() { var i; var x = document.getElementsByClassName("subs_valueprop"); for (i = 0; i < x.length; i++) { x[i].style.display = "none"; } slideIndex++; if (slideIndex> x.length) { slideIndex = 1; } x[slideIndex - 1].style.display = "block"; setTimeout(carousel, 2500); }

An employee works on the production line at a tire factory in Xingtai, China, on May 21, 2019.

Jason Lee/Reuters

China’s central bank vice governor said on Tuesday the economic hit from the coronavirus pandemic was bigger than first expected and that more monetary and credit policy support was needed.

China still has space for normal monetary policy to support the economy, Pan Gongsheng told a news conference, adding that new tools to boost bank lending to small firms were a short-term policy arrangement and not a form of quantitative easing.

“The epidemic’s impact on the economy and society is bigger than expected,” Pan said. “It is necessary to strengthen monetary and credit policy.”

Story continues below advertisement

The People’s Bank of China said on Monday it would start buying 400 billion yuan of bank loans made by local lenders to small businesses to encourage banks to lend as much as 1 trillion yuan ($140.44 billion).

Pan said the move would imply interest-free loans to small banks based on 40 per cent of their lending to small firms. The new loans will not require collateral and guarantees, removing a key obstacle for such borrowers, central bank officials said.

The PBOC will also provide 40 billion yuan in relending funds to conduct interest rate swaps with local banks through a special purpose vehicle, which it said would help banks extend loans with a principal value of about 3.7 trillion yuan.

A total 7 trillion yuan in loans to small firms are eligible for this loan extension supporting tool, central bank officials said.

Big banks should also step up lending support for small firms, although they are not included in the scheme, Pan said.

The unprecedented targeted and direct support for small firms will help stabilize growth and employment, Pan said.

China’s economy shrank 6.8 per cent in the first quarter from a year earlier, the first contraction since quarterly records began.

Story continues below advertisement

Analysts believe it will be months before activity returns to pre-crisis levels, even if a new wave of infections is avoided.

Pan said Chinese banks’ asset quality could be affected as the economy faces downward pressure.

The central bank has rolled out easing steps since early February including cuts in reserve requirements and lending rates and targeted lending support for virus-hit firms.

Premier Li Keqiang said last month the government is extending loan payments for small and micro-sized business until the end of March next year.

Be smart with your money. Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter. Sign up today.

Coronavirus information
Coronavirus information
The Zero Canada Project provides resources to help you manage your health, your finances and your family life as Canada reopens.
Visit the hub
Report an error
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed.

Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies