China to Step up Development of Financing Guarantee Industry
26 August 2015
The State Council has issued the Opinions on Promoting the Accelerated Development of the Financing Guarantee Industry as an initiative to support the industry’s reform and transformation, promote its accelerated development and better serve China’s overall economic and social development.
The Opinions require the trimming down of the industry to raise the quality, nurturing a number of strong and influential financing guarantee institutions and forming an institutional system characterised by an appropriate number of industry players, reasonable structure, orderly competition and sound operations. The Opinions state that the authorities will explore the establishment of a national financing guarantee fund with the goal of building a nationwide service of provincial re-guarantee institutions in three years to diversify the risks under a cooperation model involving banks and financing guarantee companies. The proportion of financing guarantee business serving small and micro enterprises and the development of agriculture, rural areas and farmers (so-called “three rurals”) shall reach 60% within five years. Financing guarantee business that focuses on serving small and micro enterprises and the “three rurals” should grow at a faster pace while relatively low financing guarantee fees should be maintained. New legislation governing financing guarantee companies will be introduced to establish a supervision system suited to the characteristics of the industry. The authorities will continue to increase policy support, and create a policy support system centring upon financing guarantee services to small and micro enterprises and the “three rurals”.
The Opinions state that support will be stepped up to help financing guarantee institutions expand their business scale to better serve small and micro enterprises and the “three rurals”. The feasibility of setting up a national financing guarantee fund will be explored, with a view to promoting a government-led provincial re-guarantee mechanism to offer services covering the whole country. The authorities will also conduct feasibility studies in supporting the development of provincial re-guarantee institutions through such means as equity investment and technical support by the national financing guarantee fund.
The Opinions clearly spell out the fiscal and taxation support policies to be implemented. Financing guarantee institutions will be exempt from business tax and entitled to pre-tax deductions of reserve funds. Capital investment, compensation and other means will be used to offer increased financial support to financing guarantee institutions that mainly provide services to small and micro enterprises and the “three rurals”.
For further details in Chinese, see Opinions on Promoting the Accelerated Development of the Financing Guarantee Industry.
- Mainland China
- Mainland China