BEIJING (Reuters) – China’s central bank said on Wednesday it has set up a dependency facility worth more than 200 billion yuan ($27.59 billion) to help manufacturers and other companies upgrade their equipment, as part of an effort to revive faltering demand.
The People’s Bank of China (PBOC) said in a statement that it will provide low-cost funds to financial institutions and direct them to corporate lending to support such upgrades.
The central bank added that the loans will be issued on a monthly basis, and the interest rate for eligible companies will not be more than 3.2% from September 1, 2022 to December 31, 2022. The one-year loan prime rate for China (LPR) is currently 3.65%.
The central bank said the lending facility will support sectors including education, health, culture, tourism, sports, electric vehicle chargers, urban underground utilities, new infrastructure and industrial digital transformation.
The People’s Bank of China has increasingly relied on structural or targeted policy tools, including low-cost loans, to prop up a sluggish economy, as it faces limited room to cut interest rates for fear of fueling capital flight and inflation.
The People’s Bank of China (PBOC) has rolled out accreditation facilities to support the transportation, logistics and warehousing sectors hard hit by COVID-19, as well as reducing carbon emissions, technology innovation and elderly care.
On September 14, China’s cabinet announced steps to support equipment upgrades by companies, expanding a set of measures to boost the economy wracked by the coronavirus.
(dollar = 7.2486 renminbi)