hina aims to increase direct funding for companies through financial instruments such as stocks by implementing a national investment standard, a senior official at the People's Bank of China (PBOC) said on Saturday. The majority of China's loans still come from bank deposits, while funds raised via direct channels such as equity are insufficient, limiting the scope for firms to borrow, Vice Governor Fan Yifei was quoted as saying on online portal Sina.
Fan told a forum in Beijing that China has a significant number of private investors with sufficient capital and the appetite for risk taking, citing data from the Boston Consulting Company. To lure these investors, a national investment standard should be established, specifying minimum requirements for different financial products based on an individual's income, family assets, financial support, and risk tolerance, he said.
"Low-risk tolerant investors can allocate their capital in fixed income assets while high-risk tolerant investors can invest in equities, optimising social capital allocation," Fan said. "Right now there are sparse, different standards out there." Financial institutions and online investment platforms could narrow down the requirements when they see fit, he added. In addition to the national investment standard, Fan said China plans to have a stronger multi-layered capital market. Firms could raise funds by public and private offering, or what he called "small public offering" which is in between.
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