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China Campaign to Funnel More Credit to Private Companies Stalls

  • Risk of liquidity crisis for private firms rises: Gavekal
  • New incentives needed to get banks to lend: Standard Chartered
Pedestrians walk past a construction crane in downtown Beijing.
Photographer: Qilai Shen/Bloomberg
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China’s high-profile campaign to funnel more credit to private companies has stalled according to a number of private surveys and reports, adding to concerns over the nation’s decelerating growth.

The credit confidence of small and medium enterprises began to tumble in April and is now below its level in October, when President Xi Jinping proclaimed his “unwavering support” for private companies, according to a Standard Chartered Bank Plc survey. Without further government action, private firms may be “heading for another liquidity crisis,” says research firm Gavekal Dragonomics in Beijing.