The headquarters of the People's Bank of China in Beijing Photo: IC

The People's Bank of China (PBC), the central bank, has decided to add 100 billion yuan ($13.9 billion) of refinancing to support agriculture and small businesses in need of disaster relief in 12 provinces, regions or cities, including Southwest China's Chongqing Municipality, South China's Guangdong Province and Central China's Hunan Province, the PBC said on its official website on Tuesday.

The measure aims to enhance flood prevention, relief and post-disaster reconstruction in severely affected areas, and to increase credit support for businesses in the affected areas, especially small and micro-sized enterprises, sole proprietors, agricultural enterprises and individual farmers, according to the PBC.

In July, China's natural disasters arose from torrential rains and floods, typhoons and geological disasters, while hailstorms, earthquakes and forest fires also occurred, resulting in direct economic losses of 76.85 billion yuan, according to the Ministry of Emergency Management.

The PBC will supervise relevant departments to make good use of the new refinancing quota and guide financial institutions to accurately match the financing needs of disaster relief and post-disaster reconstruction. 

All efforts are to be made to safeguard the funding needs of disaster-stricken enterprises and help enterprises resume production.

"This is a very timely and powerful financial support measure through which the central bank will give a strong boost to economic recovery and social development in the affected areas," Wang Peng, an associate research fellow at the Beijing Academy of Social Sciences, told the Global Times on Tuesday. 

As some of the most severely affected groups, small and micro-sized enterprises and individual farmers have particularly urgent financial needs. The policy reflects the central bank's deep concern for these disaster-stricken groups and highlights its active role in financial support for flood prevention and relief and post-disaster reconstruction work, Wang noted.

During an investigation and research trip to Liaoning and Jilin provinces in Northeast China from Saturday to Monday, Chinese Vice Premier Liu Guozhong has called for efforts to minimize the damage to agricultural production caused by recent torrential rains and flooding and to ensure a bumper harvest this autumn and for the year.

Liu urged efforts to improve the agriculture sector's capacity for disaster prevention and mitigation, and to step up financial support for the restoration of agricultural production.

The PBC has continued to optimize the supply of funds to support key sectors. In 2023, it increased the amount of relending and rediscounting facilities for supporting agriculture and small businesses by 250 billion yuan. It also extended the implementation period of the support policy of inclusive micro and small loans.

In January, interest rates on refinancing and rediscounting initiatives for agricultural and small businesses were cut by 0.25 percentage points, further alleviating financial burdens on these crucial economic entities.

"The central bank's measures to increase refinancing for agricultural and small businesses, as well as lowering interest rates, have injected new vitality into the development of small and micro-sized enterprises and farmers. The PBC has also provided strong financial support for the further progress of rural revitalization," Wang said.

These measures will provide a more favorable financing environment for small and micro-sized enterprises and farmers by lowering the cost of financing and increasing the availability of funds. For individual agricultural enterprises in particular, these funds will help them expand production and improve efficiency, thereby promoting the development of the entire agricultural industry chain.

On June 5, five Chinese departments including the PBC, the National Financial Regulatory Administration and the Ministry of Finance announced plans to strengthen financial support for comprehensive rural revitalization.
 
The announcement highlighted the importance of giving full play to monetary policy tools such as refinancing and rediscounting for agricultural and small businesses. Authorities should encourage financial institutions to issue special financial bonds, and support the issuance of financing instruments by agriculture-related enterprises, to further increase capital investment in key areas of rural revitalization.

Related departments are required to strengthen the synergy of industrial, fiscal and financial policies, and smooth service chains for government, bank and enterprise financing. Financial institutions should optimize their services to better meet the financial needs of the agricultural sector, read the announcement.