Beijing urges banks to inject capital for coal industry enterprises

Beijing urges banks to inject capital for coal industry enterprises

Beijing has ordered commercial banks to increase funding for coal and energy businesses to ease the power shortage crisis and secure supplies next winter.

In a new statement, China’s Banking and Insurance Regulatory Commission called on banks and financial institutions to give priority to qualified mining companies and power plants.

The purpose of the new directive is to help businesses increase thermal coal production as well as boost electricity production to alleviate the current energy crisis and prepare commodity supplies for the coming winter.

In order to stabilize prices in the market, financial institutions are also prohibited from lending capital for speculative purposes in certain commodities such as coal, steel and metals, the China Banking and Insurance Regulatory Commission stressed. strong.

The commission also prohibits borrowers from investing in stocks, bonds and the futures markets of certain commodities because it could violate Chinese government regulations.

Bắc Kinh giục ngân hàng bơm vốn để doanh nghiệp tăng sản lượng than, xoa dịu cuộc khủng hoảng thiếu điện - Ảnh 1.
Since last month, the energy crisis in the country of billions of people has become more and more serious, leading to governments in more than 20 provinces having to reallocate electricity usage.

The worst-affected provinces include Jiangsu, Zhejiang and Guangdong – three industrial centers that account for more than 30% of China’s economic output. The industries that suffer first are the ones that play an important role in the country of billions of people.

From aluminum smelting plants, steel mills to textile factories, cement factories, etc., all of them had to reduce their operation scale or even close down altogether. Apple and Tesla suppliers have halted production in some locations.

Some smaller companies have started to notify the stock exchange of requests to limit electricity consumption or suspend operations made by Beijing. The supply of many goods from textiles to electronic components is at risk of shortage.

Analysts from Goldman Sachs to Nomura have all downgraded China’s growth outlook. Goldman Sachs estimates that up to 44% of China’s industrial activity is affected. For the whole year of 2021, the bank predicts that China’s economic growth will decrease from 8.2% to 7.8%.

Bắc Kinh giục ngân hàng bơm vốn để doanh nghiệp tăng sản lượng than, xoa dịu cuộc khủng hoảng thiếu điện - Ảnh 3.

According to Bloomberg, China’s power shortage is partly due to a slowdown in coal production, with some coal miners struggling to secure financial resources after Beijing set a target to reduce the share of coal in the system. general energy structure.

In addition, the hot increase in  coal price  is also another reason. Chinese government officials are very concerned about inflation as well as the stability of the domestic market.

In a recent statement, China’s Banking and Insurance Regulatory Commission also warned people not to invest in high-end consumer goods such as Maotai wine and Pu-erh tea. However, the committee did not elaborate on this point.

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