china\'s credit push to small firms falters in factory heartland
by：Kenwei
2019-09-11
(Reuters)-
China\'s lending to small businesses should have supported the economy during its biggest economic slowdown in decades, but because banks are reluctant to lend, exporters and manufacturers in its southern industrial zone are struggling to repay the loans.
Despite Beijing\'s stimulus, several bankers told Reuters they were not interested in lending to smaller companies due to uncertain economic prospects. S. -
, China of a trade war and few years
Long-term efforts to remove risks from the financial system.
This has cooled credit flows to private sector companies, undermining stimulus measures aimed at easing the impact of slowing demand.
In the southern city of Dongguan, one of China\'s major manufacturing centers, some small businesses are shifting production overseas in the face of operational and financing challenges.
\"The most discussed topics these days --
What we often talk about in meetings
Should we move to Vietnam?
Many of my clients have moved there, \"said Li Jiajun, chief financial officer of Guangdong Lishun yuan Intelligent Automation Co. , Ltd. , told Reuters.
Li Shun, who produced carton packaging machinery, lost two of the four banks in the second quarter, and the total credit was halved to 10 million yuan ($1. 5 million).
One of the two banksboth are mid-sized -
He said he blamed the tightening of lending policies on the economic environment in the first half of the year, while another said local branches were banned from approving new loans due to a surge in bad debt.
Therefore, the company expects to generate revenue of 0. 25 billion yuan this year. After the reduction, the company postponed orders worth nearly 20 million yuan, and \"defensive measures\" were taken-to cut wages by 40% and to sell shares to raise funds.
\"There is still some disconnect between government policy and implementation on the ground.
Not so easy-
At least, I haven\'t enjoyed much so far . \"
In China, state-owned enterprises have long absorbed most of their corporate loans from government-led industries --
Controlled banks, forcing smaller borrowers across the country to rely on non-
A bank \"shadow\" lender squeezed in the financial risk crackdown.
\"We are better than in the past, but far from serving so many small companies in need,\" said Bao jiehan, deputy president of Dongguan branch of China Construction Bank.
The biggest bank, told Reuters.
26% of China\'s taxes
A banking regulatory official said that the payment business had bank loans, leaving \"enough room\" for bank loans \".
Bankers and companies say financing is particularly difficult for exporters squeezed by the trade war, as banks have stepped up scrutiny and imposed stricter risk controls.
Chen Xiuxia, chairman of Guangzhou-
Choice International said that since President Xi Jinping called on banks to curb financial risks 30 million times, lenders have gradually halved credit lines to 2017 yuan.
So far, her efforts to get more loans have not been successful, banks are asking for a lot of collateral, many of them
Bank lending institutions closed. “De-
Leverage is for the financial system, but companies like us are hit
In fact, \"Chen said, his company exports products such as air conditioners and automobiles to Africa, and is expected to generate $100 million in revenue this year.
Luo Zhiquan, chairman of Dongguan Gowin import and export, is trying to use an office building as a mortgage to get a loan of 5 million yuan to increase his credit line of 10 million yuan.
His bank will lend only 50% of the value of the property.
This is because the United States has strict bank risk control over swing exporters. S. -China trade war
Gowin traded for 200 local manufacturers, with orders worth down 10% this year due to a 50% drop in exports from his customers to the USS. buyers.
\"Some banks don\'t want to do business with trading companies anymore,\" Luo said . \" He recalled Dongguan.
The rural commercial bank told him when he stopped his credit line.
Chinese policy makers have called on the top five State-owned banks to become \"Wild Geese\" in the process of boosting lending \".
Outstanding bank loans to small businesses rose 21%year to 10.
3 trillion yuan-
Driven mainly by the five largest economies, the five have provided more credit at cheaper interest rates.
In April, China\'s State Council set a goal to increase such loans by 30% this year and cut interest rates by 1 percentage point.
CCB said that in Guangdong, loans to small businesses increased by 45% to 97.
1 billion yuan in the first half of 2019.
Bankers say their main strategy is to increase the number of borrowers, while reducing average loans per company to control risks.
Liu Lele, deputy head of small business loans at CCB Guangdong branch, said the bank\'s average of 630,000 small business loan borrowers in Guangdong was 140,000 yuan.
In the past, most small business loans averaged 10-
Bao of Dongguan, CCB, said 20 million yuan per borrower.
Small business loans are priced at 5.
Liu said that after the government asked five companies to cut financing costs for small businesses in April, the average was 3%, up from 6% last year.
Overall, loans to small businesses by the five largest banks increased by 23.
Before 5 a month for 7% average interest rate decreased by 0.
65 percentage points to 4. 79%.
\"We are trying to break even.
The profit is very small, absolutely less than 1%, \"said Liu, who hopes to adopt more markets --
A future-oriented approach to loan pricing.
Although analysts believe that the government\'s lending activities will bring risks to the profitability and asset quality of banks, the state banker said that this is not a direct problem for large banks and regulators, they set a higher tolerance for bad loans to small businesses. Some smaller-
Large banks, however, are more conservative in lending.
\"We are still experiencing
Leverage and structural change in the economy, \"said an executive at a Northern Bank of China active in Dongguan.
\"In the downturn, the risk appetite of banks is low.
At the same time, some small companies have weakened their willingness to borrow because of the gloomy economic outlook.
Industrial robot manufacturer Guangdong Songqing Intelligent Technology Co. , Ltd. has cut its sales target for this year as customers postpone orders while waitingand-
Chairman Xiao Yongxiang told Reuters.
The company closed last year.
The mechanical arm business ended as demand shrank.
Xiao said he wanted to raise 20 million yuan by selling his equity to repay half of the bank\'s loans and reduce the pressure to repay 120,000 yuan a month.
Several bankers in China told Reuters that demand for loans for eligible borrowers has weakened this year.
\"The customer told me that the labor cost and rent are very high, the trade friction damages the export, the profit is getting less and less, and the business is getting more and more difficult. Sun Shanming, deputy general manager of the small business loan department of CCB Guangzhou branch, said. ($1 = 6.
RMB 8859)
China\'s lending to small businesses should have supported the economy during its biggest economic slowdown in decades, but because banks are reluctant to lend, exporters and manufacturers in its southern industrial zone are struggling to repay the loans.
Despite Beijing\'s stimulus, several bankers told Reuters they were not interested in lending to smaller companies due to uncertain economic prospects. S. -
, China of a trade war and few years
Long-term efforts to remove risks from the financial system.
This has cooled credit flows to private sector companies, undermining stimulus measures aimed at easing the impact of slowing demand.
In the southern city of Dongguan, one of China\'s major manufacturing centers, some small businesses are shifting production overseas in the face of operational and financing challenges.
\"The most discussed topics these days --
What we often talk about in meetings
Should we move to Vietnam?
Many of my clients have moved there, \"said Li Jiajun, chief financial officer of Guangdong Lishun yuan Intelligent Automation Co. , Ltd. , told Reuters.
Li Shun, who produced carton packaging machinery, lost two of the four banks in the second quarter, and the total credit was halved to 10 million yuan ($1. 5 million).
One of the two banksboth are mid-sized -
He said he blamed the tightening of lending policies on the economic environment in the first half of the year, while another said local branches were banned from approving new loans due to a surge in bad debt.
Therefore, the company expects to generate revenue of 0. 25 billion yuan this year. After the reduction, the company postponed orders worth nearly 20 million yuan, and \"defensive measures\" were taken-to cut wages by 40% and to sell shares to raise funds.
\"There is still some disconnect between government policy and implementation on the ground.
Not so easy-
At least, I haven\'t enjoyed much so far . \"
In China, state-owned enterprises have long absorbed most of their corporate loans from government-led industries --
Controlled banks, forcing smaller borrowers across the country to rely on non-
A bank \"shadow\" lender squeezed in the financial risk crackdown.
\"We are better than in the past, but far from serving so many small companies in need,\" said Bao jiehan, deputy president of Dongguan branch of China Construction Bank.
The biggest bank, told Reuters.
26% of China\'s taxes
A banking regulatory official said that the payment business had bank loans, leaving \"enough room\" for bank loans \".
Bankers and companies say financing is particularly difficult for exporters squeezed by the trade war, as banks have stepped up scrutiny and imposed stricter risk controls.
Chen Xiuxia, chairman of Guangzhou-
Choice International said that since President Xi Jinping called on banks to curb financial risks 30 million times, lenders have gradually halved credit lines to 2017 yuan.
So far, her efforts to get more loans have not been successful, banks are asking for a lot of collateral, many of them
Bank lending institutions closed. “De-
Leverage is for the financial system, but companies like us are hit
In fact, \"Chen said, his company exports products such as air conditioners and automobiles to Africa, and is expected to generate $100 million in revenue this year.
Luo Zhiquan, chairman of Dongguan Gowin import and export, is trying to use an office building as a mortgage to get a loan of 5 million yuan to increase his credit line of 10 million yuan.
His bank will lend only 50% of the value of the property.
This is because the United States has strict bank risk control over swing exporters. S. -China trade war
Gowin traded for 200 local manufacturers, with orders worth down 10% this year due to a 50% drop in exports from his customers to the USS. buyers.
\"Some banks don\'t want to do business with trading companies anymore,\" Luo said . \" He recalled Dongguan.
The rural commercial bank told him when he stopped his credit line.
Chinese policy makers have called on the top five State-owned banks to become \"Wild Geese\" in the process of boosting lending \".
Outstanding bank loans to small businesses rose 21%year to 10.
3 trillion yuan-
Driven mainly by the five largest economies, the five have provided more credit at cheaper interest rates.
In April, China\'s State Council set a goal to increase such loans by 30% this year and cut interest rates by 1 percentage point.
CCB said that in Guangdong, loans to small businesses increased by 45% to 97.
1 billion yuan in the first half of 2019.
Bankers say their main strategy is to increase the number of borrowers, while reducing average loans per company to control risks.
Liu Lele, deputy head of small business loans at CCB Guangdong branch, said the bank\'s average of 630,000 small business loan borrowers in Guangdong was 140,000 yuan.
In the past, most small business loans averaged 10-
Bao of Dongguan, CCB, said 20 million yuan per borrower.
Small business loans are priced at 5.
Liu said that after the government asked five companies to cut financing costs for small businesses in April, the average was 3%, up from 6% last year.
Overall, loans to small businesses by the five largest banks increased by 23.
Before 5 a month for 7% average interest rate decreased by 0.
65 percentage points to 4. 79%.
\"We are trying to break even.
The profit is very small, absolutely less than 1%, \"said Liu, who hopes to adopt more markets --
A future-oriented approach to loan pricing.
Although analysts believe that the government\'s lending activities will bring risks to the profitability and asset quality of banks, the state banker said that this is not a direct problem for large banks and regulators, they set a higher tolerance for bad loans to small businesses. Some smaller-
Large banks, however, are more conservative in lending.
\"We are still experiencing
Leverage and structural change in the economy, \"said an executive at a Northern Bank of China active in Dongguan.
\"In the downturn, the risk appetite of banks is low.
At the same time, some small companies have weakened their willingness to borrow because of the gloomy economic outlook.
Industrial robot manufacturer Guangdong Songqing Intelligent Technology Co. , Ltd. has cut its sales target for this year as customers postpone orders while waitingand-
Chairman Xiao Yongxiang told Reuters.
The company closed last year.
The mechanical arm business ended as demand shrank.
Xiao said he wanted to raise 20 million yuan by selling his equity to repay half of the bank\'s loans and reduce the pressure to repay 120,000 yuan a month.
Several bankers in China told Reuters that demand for loans for eligible borrowers has weakened this year.
\"The customer told me that the labor cost and rent are very high, the trade friction damages the export, the profit is getting less and less, and the business is getting more and more difficult. Sun Shanming, deputy general manager of the small business loan department of CCB Guangzhou branch, said. ($1 = 6.
RMB 8859)
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