To implement the guidelines of the Central Economic Work Conference and the Central Financial Work Conference, ensure progress in technology finance, green finance, inclusive finance, pension finance and digital finance, and implement the decisions and arrangements made by the State Council executive meeting on promoting a new round of large-scale equipment renewal and trade-in of consumer goods, the People’s Bank of China (PBOC) launched central bank lending for sci-tech innovation and technological transformation. The creation of this instrument is aimed to encourage and guide financial institutions to step up financial support for sci-tech-based small and medium-sized enterprises (SMEs) as well as projects that involve technology transformation and equipment renewal in key areas. Central bank lending for sci-tech innovation and technological upgrading is a policy continuation and link with previous cental bank lending for sci-tech innovation and special central bank lending for equipment upgrading. It is refined on the basis of reviewing the experience of the above two tools, thus supporting financial institutions in elevating the quality and efficiency of financial services, and better meeting financing needs in the fields of sci-tech innovation, technological transformation and equipment renewal.

The quota for the new facility registers RMB500 billion. The interest rate of the one-year facility stands at 1.75 percent. It can be extended twice, with a one-year term each. The PBOC will provide low-cost funds for 21 financial institutions, including China Development Bank, Postal Savings Bank of China, and some policy banks, state-owned commercial banks, and joint-stock commercial banks. The facility will be helpful in guiding financial institutions, based on making decisions at their own risk, to provide credit support for sci-tech-based SMEs in their early stage of development or in growth stage, and for technological upgrading and equipment renewal projects to help key sectors become more digitalized, smart, advanced, and green.

Financial institutions shall, in light of the applications of enterprises, make independent decisions at their own risk on whether to issue loans and loan granting conditions, with reference to the lists of alternative enterprises and projects provided by competent agencies. Financial institutions shall apply to the PBOC for central bank lending, and the PBOC shall review the loan ledger. For eligible loans on the lists of alternative enterprises or projects, the PBOC will provide financial institutions with central bank lending equivalent to 60 percent of the loan principal.