China Fights Property Crisis With $70 Billion Tech Lending Program
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The People’s Bank of China has set up a re-lending program worth $70 billion (500 billion yuan) as it aims to speed up the growth of the science and technology industries. According to the announcement, the program will be offering loans to small and medium-sized tech companies through 21 banks.
The central bank has pegged the interest rates for the loan at 1.75% yearly, according to a statement about the program. The statement also noted that the loanees can extend the one-year loan term twice after each year.
China Wants To Improve Investors’ Confidence
The policymakers in the second-largest economy in the world are looking to increase confidence among investors and improve liquidity. The country is looking to come out of a property crisis that has affected its overall economic growth.
According to analysts, the Chinese government is preparing the tech sector to be the country’s next major driver of economic growth as the real-estate sector faces serious challenges. The real estate sector was accounting for 25% of its GDP before the property crisis. Now, China is turning to the technology industry to bail the country out and continue its economic growth.
While the Chinese government, led by Xi Jinping, is facing internal real-estate issues, it’s also looking to compete favorably against the United States in what has now been termed a “technology war” between the two economic giants.
China Continues To Offer Heavy Incentives To Tech Manufacturers
The U.S. has continuously set up measures to clamp down on the export of advanced technology to China. Measures have also been taken to raise tariffs on Chinese manufacturers who are benefiting from the generous state subsidies given by the Chinese government.
For instance, both Europe and the U.S. are taking serious steps to reduce the flow of advanced chipmaking tools to Beijing, as they worry that the Chinese military is utilizing these technologies. They are also probing the Chinese EV manufacturers.
Europe has shown concerns about the unfair advantage given to Chinese manufacturers, while the U.S. is worried about the incessant data flows into China. These Chinese companies are having an unfair advantage because of the numerous subsidies they enjoy from the Chinese government.
The U.S. is also showing serious concerns about China’s excess manufacturing of clean energy technology, such as solar panels and EVs, supported by heavy subsidies from Beijing. China is not only investing in this sector. Other areas like quantum computing, semiconductors, and commercial spaceships have also received severe attention from the government.
