Financial Services Association, April 7 (Reporter Wang Hong) Today, the People's Bank of China set up a reloan for technological innovation and technological transformation. The loan amount is 500 billion yuan, with an interest rate of 1.75%, which is significantly lower than the 3.45% quote of the latest 1-year LPR, providing incentives and guidance to financial institutions to increase financial support for technology-based small and medium-sized enterprises and technological transformation and equipment renewal projects in key areas.

Industry experts said that the structural tools introduced this time are an “upgraded version” of the original structural tools for scientific and technological innovation and equipment renewal. Tool interest rates are consistent with existing interest rates such as special reloans for inclusive pensions, etc., which shows the direction of monetary policy to guide structural optimization. It is expected that the central bank will adopt a flexible combination of total volume and structural tools according to changes in the economic situation. It is not ruled out that subsequent structural tools will be flexibly adjusted and innovated according to the five major articles and the needs of industrial economic development.

The loan interest rate of 1.75% is significantly lower than the 1-year LPR

The reloan amount for scientific and technological innovation and technological transformation is 500 billion yuan, with an interest rate of 1.75%. The term is 1 year. It can be extended 2 times, each time for 1 year. The distribution targets include 21 financial institutions including China Development Bank, policy banks, state-owned commercial banks, China Postal Savings Bank, and joint-stock commercial banks.

The central bank said that the establishment of reloans for scientific and technological innovation and technological transformation will help guide financial institutions to provide credit support to technology-based small and medium-sized enterprises in the start-up and growth stages, as well as digital, intelligent, high-end, and green technological transformation and equipment renewal projects in key areas under the premise of making independent decisions and bearing their own risks.

“The target of the reloan tool is very clear. One category is technology-based small and medium-sized enterprises, and the other category is technological transformation and equipment renewal projects in key areas. It is a continuation of the original policy of refinancing for scientific and technological innovation and special reloans for equipment upgrading and transformation,” said Yang Chang, head of the policy task force and chief analyst at the Zhongtai Securities Research Institute.

In terms of interest rates, Yang Chang believes that the 1.75% interest rate for refinancing instruments is a significant decrease compared to the latest price of 3.45% for 1-year LPR. It is consistent with existing interest rates such as special reloans for inclusive pensions, special reloans to support the clean and efficient use of coal, and special reloans for transportation and logistics, which fully illustrates the direction of monetary policy to guide structural optimization.

“The structural tool launched this time is an 'upgraded version' of the structural tools for technological innovation and equipment renewal introduced earlier. Compared with previous tools, there have been changes in the field of tool services, emphasizing credit resources to support technology-based small and medium-sized enterprises in the start-up and growth stages in digitalization and green equipment upgrading and transformation in key areas,” said Zhou Maohua, a researcher in the macro marketing department of Everbright Bank.

Subsequent structural tools may be able to adapt and innovate flexibly

Financial institutions independently decide whether to issue loans and loan conditions based on enterprise applications, referring to alternative enterprise lists and project lists provided by industry authorities, in accordance with the principle of self-responsibility at risk. Financial institutions apply for reloans from the People's Bank of China, and the People's Bank of China reviews loan accounts. For loans that meet the requirements in the list of alternative enterprises or projects, reloans are issued to financial institutions at 60% of the loan principal amount.

Zhou Maohua also said that structural instruments have many advantages. They have characteristics such as targeted direct access and compatible incentives, which help smooth policy transmission and guide financial institutions to increase support in specific fields. At the same time, the central bank provides financial institutions with low-cost funding, which helps to motivate financial institutions to lend and effectively reduce financing costs for the real economy. At the same time, it has also expanded the total monetary policy space, improved the quality and efficiency of policy implementation, etc. Structural tools require banks to adopt special account management and earmarked funds, so that supervisory authorities can check and evaluate the implementation of policy instruments, and form certain “restrictions” on the use and investment of bank-related funds.

Many industry experts believe that the refinancing tool introduced this time is to implement the requirements of the central financial work. It also implements a new round of domestic equipment renewal and consumer goods trade-in decisions and arrangements to help the economy recover further. Not long ago, at the economic-themed press conference of the Second Session of the 14th National People's Congress, the People's Bank of China proposed “setting up reloans for scientific and technological innovation and technological transformation.”

“In a complex internal and external environment, the central bank is objectively required to respond flexibly to the “dilemma and difficulty” of the policy. It is expected that according to changes in the economic situation, the central bank will adopt a flexible combination of total and structural tools to promote the balanced allocation of credit resources and improve the efficiency of resource allocation.” Zhou Maohua also believes that subsequent structural tools will be flexibly adjusted and innovated according to the five major articles and industrial economic development needs.