China unveils guideline to elevate financial support for new industrialization

Chinese authorities have jointly released a key guideline on strengthening financial support for new industrialization, elevating the country’s coordinated efforts to support manufacturing upgrade and advance new quality productive forces.

Under the guideline, the country aims to develop a financial system by 2027 that is generally mature in supporting the high-end, intelligent and green development of the manufacturing sector.

The guideline was jointly issued by the People’s Bank of China, the Ministry of Industry and Information Technology, the National Development and Reform Commission and four other central government departments and was released to the public on Tuesday.

“A targeted and differentiated approach shall be maintained, combining support with restrictions, to accelerate the industrial sector’s move toward the mid-to-high end, while preventing excessive competition,” the guideline said.

By 2027, the number and scale of bond issuance by manufacturing firms will see continuous growth, while equity financing will be enhanced significantly, fully meeting the effective credit demand from manufacturing enterprises, according to the guideline.

Financial products will become more diversified, and various instruments — such as loans, bonds, equity, and insurance— will be more closely coordinated and integrated, under the premise of effectively preventing cross-sector financial risks.

Specifically, the guideline called for leveraging structural monetary policy tools to encourage medium- and long-term financing from banks for overcoming technological bottlenecks and developing critical products in key sectors, such as integrated circuits, industrial mother machines, medical equipment, servers, instruments and measurement devices, basic software, industrial software and advanced materials.

Eligible enterprises in emerging industries — including next-generation information technology, basic and industrial software, intelligent and connected vehicles, new energy, new materials, high-end equipment, spatiotemporal information, commercial aerospace, biopharmaceuticals, and cybersecurity and data security — will be supported in raising funds through the multi-tiered capital market.

Under the premise of controllable risk, long-term capital — including government investment funds, State-owned enterprise funds and insurance companies — will be encouraged to accelerate investment in future and advanced industries such as manufacturing, information, materials, energy, space and health, the guideline added.