BEIJING (Reuters) -China issued guidelines on Tuesday to boost financial support for advanced manufacturing, saying it would encourage banks to provide more medium- and long-term financing to industries such as integrated circuits and advanced materials.
The guidelines, jointly released by seven state agencies including the central bank and the finance ministry, are aimed at promoting industrial upgrading while curbing excessive competition, which has been a growing concern for Chinese policymakers as overcapacity fuels deflationary pressures.
Beijing is also looking to spur domestic demand and technological innovation as U.S. trade threats threaten to stifle growth.
The latest financial plan “aims to deepen supply-side structural reform in the financial sector, strengthen the synergy between industrial and financial policies, and provide high-quality financial services for advancing new-type industrialisation and developing new quality productive forces,” the agencies said.
China will adopt policies that combine support and control, promote industries’ move up the value chain, and prevent so-called “involution-style” cut-throat competition, according to the guidelines.
China will use structural monetary policy tools to encourage banks to provide medium- and long-term financing for key sectors including integrated circuits, medical equipment, servers, basic software, industrial software, and advanced materials, the guidelines said.
Technology firms achieving breakthroughs in core technologies will benefit from “green channels” for listings, mergers and acquisitions, and bond issuance, according to the guidelines.
By 2027, China aims to establish a financial system that supports high-end, intelligent, and green development of the manufacturing industry, with significantly enhanced service adaptability, the state agencies said.
The guidelines also call on financial institutions to provide financial solution plans for companies severely affected by external factors and pledge support for mining companies to stabilise supply and prices of commodities.
In recent years, China has been directing more bank credit to the manufacturing sector, shifting resources away from the debt-laden property market.
(Reporting by Beijing Newsroom and Kevin Yao; Editing by Andrew Heavens and Kim Coghill)
