China Pledges Trade-Sector Support to Help Economy

Politics Reuters

China plans to give more of its importers subsidised loans as part of wider efforts to shore up the trade sector and support the world's second-largest economy, the Chinese cabinet said on Wednesday after a weekly meeting.

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Hurt by anaemic foreign and domestic demand, China's trade sector has undershot the government's target of growing the value of Chinese imports and exports by 6 percent this year. In fact, imports and exports slumped almost 7 percent in the first six months.

To stoke activity, the State Council said it will increase the disbursements of subsidised loans for importers, and ensure that goods are cleared more quickly through customs.

More advanced technology equipment and components will also be imported to boost China's domestic demand and help its companies to move up the production value chain, the government said in a statement on its website.

The cabinet also reiterated China's currency policy by saying that the yuan <CNY=CFXS> will be kept at a stable and reasonable level to minimise the foreign exchange risks faced by companies.

In reality, however, the yuan - which tracks the dollar - has hit record highs this year against a series of foreign currencies including the euro <EUR=> on the back of a stronger greenback.

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More credit guarantees would be given to exporters so they can secure loans, and banks would be encouraged to provide support to exporters when they are claiming their tax rebates.

China will also increase the amount of loans it issues from its $3.69 trillion of foreign exchange reserves, and local companies will get more opportunities to raise renminbi funds abroad.

(Reporting by Judy Hua and Koh Gui Qing. Editing By Nicholas Heath)