Foreign businesses often face a familiar challenge in China: how to secure reliable financing when working with local small and medium-sized partners. According to Zou Lan, Deputy Governor of the People's Bank of China (PBOC), the answer increasingly lies not in real estate or land, but in movable property financing—a system that turns machinery, inventories, and receivables into usable collateral.

In a recent article, Zou emphasized that after more than a decade of reforms, China has established a unified registration system for movable property and rights-based guarantees. This platform, he noted, has already accumulated 152,000 registered users—including banks, leasing firms, and cooperative financial institutions—and recorded 42.2 million registrations since 2021, serving nearly 18 million guarantors, mostly MSMEs. The market itself is now valued at 15 trillion yuan (about USD 2.1 trillion), according to a 2024 survey by the PBOC's Credit Reference Center.

Zou argued that movable property financing is becoming “a crucial tool” for small and micro businesses to overcome credit bottlenecks. Yet, he also admitted that China's utilization rate of movable assets still lags behind international standards, leaving large pools of resources underused.

Looking ahead, his blueprint centers on three priorities:

• Legal clarity: Expanding the scope of collateral recognized under the Civil Code and ensuring enforceability for new forms of guarantees.

• Digital infrastructure: Upgrading the PBOC's unified registration system to improve efficiency, flexibility, and accessibility.

• Market foundations: Tackling long-standing hurdles such as asset valuation, risk control, and liquidation through stronger information-sharing and standardized appraisal systems.

For foreign investors, banks, and multinational companies, the reforms could provide more certainty when extending credit or partnering with Chinese SMEs. By broadening collateral options, China is working to unlock liquidity in its supply chains—a change that may also create new opportunities for cross-border finance, trade credit insurance, and leasing businesses.

As Zou put it, the ultimate goal is to “accelerate the formation of a healthy market ecosystem” where movable assets are no longer idle but actively power economic growth. For global businesses, this evolution in China's credit system may prove just as significant as traditional property-based lending reforms, offering both a model and a market to watch.