Council to Relax Requirements for Fixed Asset Investments
The State Council is planning to relax the requirements for fixed asset investments which include lowering minimum capital requirements, even with the economy showing signs of weakness. China will also establish a 60 billion yuan national small and medium enterprises development fund a move that comes as China’s economy sputters after years of double digit growth and stock markets which remains volatile this summer.
Weak August factory data added to the fears of investors that the second largest economy may have a hard landing. China will be cut minimum capital ratio requirement for airports, coastal and water transport and ports to 25 percent from 30 percent. As the Cabinet gave requirement for railways, highways and urban rail drop 20 percent from 25 percent. Also corn deep processing requirements falling 20 percent from 30 percent as well.
Industries that have excess capacity namely cement, steel, coke, and electrolytic aluminum continues to stick to their existing requirements to 30 to 40 percent. The SME fund which is set aside will help counter reluctance from China’s commercial banks in lending to companies with financing difficulties that directly affect employment.