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China restructures credit policy
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As part of China's efforts to restructure its economy, the country's banks are extending more loans to new and strategic industries.
They're also limiting the development of high energy consuming and polluting industries. Low carbon and environmental protection industries are seen as the future direction for the country's growth.
This methane power station is built on a chicken farm. It uses chicken waste to produce the gas which then is used to generate electricity.
Pan Weizhi, Presidential Assistant of Beijing DQY Agricultural Technology, said, "Before the power station was set up, the chicken waste was given to neighboring farmers as manure. It was polluting the environment."
Although the power station has many benefits, its equipment is very expensive. When the company launched the project, they needed to get finance from banks. Although such a new project comes with uncertainties, its sustainability features won it credit support from the Industrial bank.
Huang Shihua, Manager of Sustainable Finance Service, Industrial Bank, said, "It is a typical sustainable development project. Firstly it has clear environmental benefits, secondly it has good social benefits, the waste from producing methane can be used for agricultural production. And finally, it's economically rewarding."
The Industrial Bank's sustainable finance service is dedicated to providing finance for low-carbon economy and energy saving, environmental protection projects.
Professor Zhao Xijun, Renmin University, said, "New industries face some uncertainties in their start-up phase. Banks also face some risk in extending credit. Innovation is needed to provide finance support for enterprises to upgrade their technology while lowering risk, such as using quality products or patent as collateral."
In 2009, many banks became favorable to new industries and began offering support for their development. The policy will continue this year, with expanding domestic demand, and optimizing the credit structure key priorities.
Professor Zhao Xijun, Renmin University, said, "The development of new industries is a sign of a country's future competitiveness. The banking sector should use financial tools to inject capital into their development and expansion."
Meanwhile China is also strictly controlling loans to high energy consuming, polluting and over-capacity industries, such as coal, iron , steel and chemicals.
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