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In the past five years, our country has seen significant overperformance in the annual growth rates of inclusive small and micro-business loans, green loans, medium and long-term loans for high-tech manufacturing industries as well as loans to technology-driven small and medium-sized enterprises (SMEs) compared to the overall annual loan growth rates. Moving forward, how can financial supports be boosted to achieve a high level of technological independence and strength? Thank you.

Lu Lei:

Thank you for your question. As you might be aware, the PBC established a dedicated department, namely the Credit Market Department, in the first half of this year, to better implement the five major strategies for the development of the financial sector. Today, we also have with us Mr. Peng, Director of the Credit Market Department. I will pass your question to Mr. Peng.

Peng Lifeng:

Thank you for your question. The Central Financial Work Conference highlighted the significance to effectively implement the five major strategies regarding finance: technology finance, green finance, inclusive finance, pension finance and digital finance, with technology finance being listed first. Its significance shouldn't be understated. In recent years, the PBC has worked closely with the Ministry of Science and Technology and other relevant departments to continuously enhance financial support for scientific research and technological development as well as for the commercialization of results throughout the entire financial service chain, achieving noteworthy positive outcomes. For example, we made an action plan to enhance support for financing of tech-centric businesses, facilitated the establishment of pilot zones for financial reforms targeting sci-tech innovation, as well as established a policy framework for technology finance with coordination among various departments and between the central and local authorities. We have also prioritized technological innovation within our strategy to enhance the structure of capital supply, establishing a total of 700 billion yuan in special re-loans to encourage tech innovation and executing targeted actions to advance financial service capabilities in technological fields. Over the past five years, lending to technology enterprises in our country has grown at an annual rate of 20%, nearly double the overall loan growth rate. Detailed data shows even more encouraging trends: loans to tech-oriented SMEs have grown at an annual rate of 25%, higher than the growth rate of loans to all sci-tech enterprises, and loans to "specialized, sophisticated, distinctive and innovative" enterprises have risen by 18% annually, both well above the general lending growth. Furthermore, the issuance of tech notes—bonds specifically issued by tech enterprises—has totaled 860 billion yuan.

Looking ahead, our focus remains firmly on establishing China as a leader in science and technology by developing a financial system that resonates with and bolsters technological innovation. We aim to channel financial capital to invest in projects at the early stages, in small enterprises, over long time horizons, and in advanced and core technologies.

In our strategic approach, we are committed to a comprehensive methodology that integrates various elements. We are dedicated to enhancing financing services for major national scientific and technological projects, establishing a coordination mechanism between financial policies and scientific and technological industrial policies, expanding the array of policy tools and measures for boosting financial support, refining the risk mitigation mechanisms for significant technological research as well as encouraging financial institutions to offer long-term, cost-effective financing support. Furthermore, we are determined to provide robust financial services throughout the entire lifecycle of tech enterprises. We know that these enterprises transition through distinct stages: seed, startup, growth and maturity. With varying financial needs at each stage, we focus particularly on fortifying support for the startup and growth phases of sci-tech SMEs, identified as the more vulnerable segments within our national framework of scientific and technological financial services. To deepen the financial sector's supply-side structural reform, we aim to elevate three key ratios. First, we will increase the share of direct financing within social financing, further diversify capital market financing products and introduce specialized financial bonds dedicated to scientific and technological innovation. These differ from the science and technology innovation notes issued by tech enterprises in that these special financial bonds are issued by financial institutions specifically to strengthen tech enterprises and to broaden the fund resources for financial institutions. Simultaneously, we will enhance incentives and transformations within the financial system to cultivate patient capital. Second, we intend to amplify the proportion of investment at early stages and in small businesses in equity financing, implement policies and measures for the high-quality development of venture capital, optimize the complete cycle of venture capital covering fundraising, investment, management and exit, as well as improve the convenience for foreign investors undertaking equity and venture investment in China. Lastly, we seek to boost the fraction of loans allocated for scientific and technological innovation within the total loan portfolio, effectively utilize reloans designated for technological upgrades and innovations, set up an evaluation mechanism for tech-financial services, guide financial institutions to improve their risk assessment capabilities for tech enterprises, and develop more financial products tailored to the unique requirements of the high-tech sector.