Good news is coming to small businesses in the world’s second largest economy as China’s financial regulator recently “told banks to “significantly cut” lending rates for small firms in the third quarter in comparison with the first quarter.”  This news comes in response to a potential trade war that could see China’s economic growth rate slow.

This is not the first time China has saught to continue small business growth.  In May, we reported that the country cut taxes to try and help small business expansion.  In addition, to ease refinancing pressure “China’s central bank recently cut banks’ reserve requirement ratios by 50 basis points, releasing $108bn in liquidity.”

Despite China not disclosing lending rates, the latest monetary policy report revealed that the “weighted average lending rate for the nonfinancial corporate sector was 5.96% in March.  Private companies and small businesses, whose financing costs tend to be much higher than those for large state firms, have suffered the most in the strained liquidity conditions. Recent official surveys also show that tight funding has hit smaller manufacturers.”

 

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