China Calls for More Financial Support for Manufacturing Sector

Chinese regulators have urged the nation's financial institutions to step up financial support for the manufacturing sector, a move that comes amid rising concerns abroad about the country's industrial capacity.

Banks should provide more credit to strategic industries, including artificial intelligence, biotechnology and aerospace, three of China's top regulatory bodies said in a joint notice. Lenders should also devise credit plans for the manufacturing sector and increase long-term loans to the sector, they said.

The notice was issued by China's state planner, industrial regulator and financial regulatory body on Tuesday.

Other sectors highlighted by the regulators for business expansion abroad included autos, home appliances, machinery, aviation, shipbuilding and marine engineering equipment.

The move comes after China reported higher-than-expected economic growth in the first quarter, buoyed by a strong industrial revival. Industrial production grew 6.1% from a year earlier in the first quarter, accounting for 37.3% of China's economic growth, official data showed. That likely reflects authorities' hunt for new growth drivers as consumption remains soft and the property sector sluggish.

Officials have been steering investment toward manufacturing and exports, placing sectors like electric vehicles as top priorities for development.

China's industrial activity is increasingly geared toward higher value-added sectors, ING economists said. Its expansion in high-tech manufacturing is in line with larger efforts to transition up the value chain, chief Greater China economist Lynn Song wrote in a note.

The push is ratcheting up trade frictions. Some Western countries have recently complained about cheap Chinese goods like EVs and renewable-energy equipment flooding global markets.

U.S. Treasury Secretary Janet Yellen said in a recent trip to China that the country is too large to export its way to rapid growth and its industrial overcapacity is pressuring other economies.

Chinese officials and state media have pushed back, saying that they are developing their economy fairly.

Against this backdrop, the latest sign of state support for manufacturing could stoke trade tensions further.

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(END) Dow Jones Newswires

April 16, 2024 06:01 ET (10:01 GMT)

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