China central bank reduces room for firms to borrow abroad, reversing March move
- China has seen a steady rebound from the coronavirus crisis, with both exports and manufacturing activity rising rapidly in November.
BEIJING: China's central bank said on Friday that it has tightened the way it assesses cross-border financing risks for companies as China's economy stages a strong recovery from the COVID-19 pandemic.
The People's Bank of China (PBOC) has lowered a parameter on cross-border financing under its macro-prudential assessments to to 1 from 1.25, it said in a statement on its website, effectively scaling back the room for firms to borrow abroad.
The move is in order to "further improve the macro-prudential management of cross-border financing and guide financial institutions to adjust their forex asset and liability structure on a market-based way," the PBOC said.
"Financial institutions should establish a 'risk-neutral' concept to better serve the development of the economic society," said the PBOC.
China has seen a steady rebound from the coronavirus crisis, with both exports and manufacturing activity rising rapidly in November.
The string of upbeat data has led economists to forecast some winding down in 2021, of China's easing measures introduced since the start of the pandemic.
Authorities in March increased the same parameter on cross-border financing to 1.25 from 1, making it easier for domestic firms hit by the coronavirus outbreak to raise more funds in overseas markets.
China's outstanding foreign debt rose to $2.13 trillion at the end of June, up from $2.09 trillion at the end of March, according to latest data from the foreign exchange regulator.
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