China's foreign exchange regulator announced Thursday that it will expand a pilot program on facilitating high-tech enterprises in more regions to borrow money from overseas in the latest effort to broaden financing channels for needy businesses.
The program, introduced in 2018 in Beijing's Zhongguancun science park to allow cross-border funding by eligible medium and small high-tech firms, will be expanded to some areas in Shanghai and the provinces of Hubei and Guangdong, according to a statement by the State Administration of Foreign Exchange (SAFE).
In recent years, China has seen a surge in the number of high-tech start-ups and the government has adopted a slew of favorable policies to encourage their growth.
A week ago, China adjusted a key parameter in its macro-prudential management to allow domestic firms to borrow more foreign debt.
The macro-prudent adjustment parameter, a multiplier that decides the upper limit of outstanding cross-border financing an institution can have, was set at 1.25 starting March 12, up from 1 previously, according to a joint statement by the People's Bank of China and the SAFE.
The move is expected to help domestic institutions, especially small and medium-sized enterprises and private firms, raise funds through multiple channels and ease their financing strain.
The scale and structure of China's foreign debt is reasonable at present, and the risk of foreign debt is generally controllable, the statement said, adding that the adjustment will not cause a substantial increase in the scale of foreign debt.
The SAFE said it will roll out more measures to facilitate foreign exchange businesses and improve the management framework to prevent risks from cross-border capital flows.
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