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BEIJING, March 28 (Reuters) - China said on Tuesday it would expand the scope for insurance companies to provide more low-cost and long-term funds for the manufacturing sector as part of a broader effort to ramp up financial support for struggling manufacturers to upgrade.
China will support insurers investing in manufacturing firms’ preferred stocks, bonds for mergers, and private equity funds that help to upgrade manufacturing, the central bank said on its website.
Insurers would also be encouraged to set up insurance asset management entities for the sector, the document said.
A 12-page document setting out the proposed changes was jointly issued by five top government entities - the People’s Bank of China (PBOC), Ministry of Industry and Information Technology, and the country’s banking, insurance and security regulators - to address China’s urgent need to move its largely low-end manufacturing industry up the value chain.
The document said China would also support securitization of credit assets in the sector and would encourage firms to quicken their pace at which they list on stock markets at home and overseas, as well issuing bonds to raise funds.
Banks and financial institutions were also told to “appropriately” conduct pilot programs to securitize bad loans in a sector “burdened with overcapacity to actively reduce credit risks”.
China will also step up monetary credit policy support for firms in the sector to modernize and expand overseas.
China first laid out its Manufacturing 2025 initiative in May of 2015. Its objectives included internally developing nationwide competencies in 10 critical sectors, new energy vehicles, rail transport equipment, automated machine tools and robotics, and power equipment.
But foreign business groups have grown increasingly concerned that China’s plan to boost domestic manufacturing by 2025 could be used to discriminate against foreign firms in favor of Chinese competitors. (Reporting by Nicholas Heath, Shu Zhang and Yawen Chen; Editing by Eric Meijer)