China issues new financial guidelines to spur consumption, boost income

China on Tuesday released guidelines aimed at using financial tools to boost consumption, with pledges to support employment and raise household incomes as part of broader efforts to bolster the economy. 

The guidelines, drafted jointly by six government departments and released by the central bank, said China would support eligible companies across the consumer industry chain to raise funds through stock market listings and other channels. 

China will "guide financial institutions to strengthen financial services from both the supply and demand sides of consumption, meet the diversified financing needs of various entities and promote the expansion of high-quality consumption," the central bank said. 

Banks will be encouraged to establish and improve internal structures to provide efficient and convenient services in the field of consumption, innovate credit products while managing risks, according to the guidelines. 

China aims to boost residents' employment and income growth, and raise consumer confidence, according to the guidelines jointly drafted by the central bank, the state planner, the finance ministry, the commerce ministry, the financial and securities regulators. 

The central bank will use various policy tools such as reserve requirements, relending and rediscounting, and open market operations to maintain liquidity and reduce overall social financing costs, it said. 

Last month, the central bank unveiled a 500 billion yuan ($69.71 billion) relending facility for elderly care and services consumption, in a bid to encourage banks to offer financial support to the accommodation, catering, educational and elderly care sectors. 

China will support qualified firms in the consumption sector raise funds via initial public offerings (IPOs) and support eligible firms in service consumption areas to issue bonds, according to the guidelines. 

The country will also encourage the issuance of consumer-focused exchange-traded funds, and support eligible projects in issuing Real Estate Investment Trusts (REITs) in the infrastructure sector, the guidelines showed. 

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