Historic low loan interest rates in China cut financing, credit costs

China's loan interest rates have declined to a relative historic low level recently, lowering the financing costs for enterprises and credit costs for the people.

In July, the country's loan prime rate (LPR) fell, leading to a further decrease in loan interest rates.

According to the People's Bank of China (PBOC), the weighted average interest rate on new corporate loans stood at 3.65 percent in July, and the interest rate on new personal housing loans at 3.4 percent, down 22 basis points and 68 basis points year on year, respectively, both at historic lows.

"At present, the pressure of a narrowing net interest margin faced by commercial banks is still huge. The PBOC has resisted internal and external pressure to continue cutting interest rates, and guided the 1-year and 5-year LPR to fall by 10 basis points and 35 basis points, respectively, which is not easy and fully demonstrates the strategic determination of our monetary policy based on our own conditions and needs," said Dong Ximiao, chief researcher at Merchants Union Consumer Finance Company Limited.

In addition, in late July, the PBOC announced that it would adjust the 7-day reverse repo operation in the open market to follow a fixed rate and invite quantity bidding.

Experts say this will establish the position of the 7-day reverse repo interest rate as the policy interest rate and stabilize market expectations.

"The recent array of reform measures of the PBOC are conducive to improving the formation and regulation mechanism of market-oriented interest rates. In the future, with the smooth transmission of interest rates from short-term to long-term ones, the quotation quality of the LPR will continue to improve, and the quality and effectiveness of the interest rate policy to support the real economy will also improve further," said Dong.

Historic low loan interest rates in China cut financing, credit costs

Historic low loan interest rates in China cut financing, credit costs

Historic low loan interest rates in China cut financing, credit costs

Historic low loan interest rates in China cut financing, credit costs

Historic low loan interest rates in China cut financing, credit costs

An industrial matchmaking event was held Sunday in Kunming, the provincial capital of southwest China's Yunnan, drawing over 330 billion yuan (over 46 billion U.S. dollars) in investment as the region seeks to attract emerging industries from outside the province.   Themed "Sharing New Advantages of Industrial Transfer, Jointly Building a Highland of International Cooperation," the 2024 China Industrial Transfer and Development Matchmaking Activities (Yunnan) focused on drawing investment into key sectors like biomedicine and information industries in Yunnan, a region rich in energy and natural resources.      Financial institutes like China Development Bank, Industrial and Commercial Bank of China, and China Merchants Bank will provide financing services for key industrial transfer projects.   "A large part of the signed industrial transfer projects is related to the biomedicine and comprehensive healthcare industry, the photovoltaic industry, the information industry, and the equipment manufacturing industry. So far, such signed projects total 903,  with those of them working to strengthen, extend, and complete the industrial chains accounting for 40 percent, 20 percent, and 40 percent, respectively," said Shi Youlian, deputy director of the Department of Industry and Information Technology of Yunnan Province.   The matchmaking event plays a significant role in helping enterprises up and down the supply chain and the industrial chain to cooperate and building Yunnan into a pilot zone of industrial transfer and an industrial hub that connects South Asia and Southeast Asia, said Jin Zhuanglong, minister of industry and information technology.      "We will push for a gradual industrial transfer from east to central and west China. We will support Yunnan to take advantage of its functional positioning and industrial foundation, absorb relocated industries, and boost the development of its characteristic and competitive industries like the industries of new energy, new materials and biomedicine in an effort to enhance the region's overall strength and capacity for achieving sustainable development," said Jin.

Yunnan holds matchmaking activity to boost transfer of industry