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By Yin Lei

Favorable policies and influx of funds are set to relieve the financing strains troubling China’s non-public sector this year, said a report of Economic Information Daily on Tuesday.

This year, many of China’s private enterprises have encountered financing challenges, as shown by the frequent occurrence of credit defaults and liquidations of pledged equities among them.

In October, seven Chinese companies, all of them privately owned, made the first default on their bonds. In the first eight months of 2018, private companies at home obtained a net amount of 187.7 billion yuan (27.04 billion U.S. dollars) in financing, down from the year-on-year figure of 450.8 billion yuan (64.94 billion U.S. dollars) in 2017 and 869.6 billion yuan (125.27 billion U.S. dollars) in 2016.

A series of forced sell-offs of pledged equities have weighed heavily on the A-share market. A survey by Vanho Securities Co., Ltd. revealed that pledged shares in China are already worth 4.61 trillion yuan (664.28 billion U.S. dollars), accounting for 10.32 percent of the A-share’s market capitalization.

Against this backdrop, China has stressed strong support for its non-public sector and put forward policies to this end. Funds are coming to the rescue of private enterprises from multiple sources.

As of Nov. 12, China’s securities companies had registered 11 asset management schemes, worth a total of 22.82 billion yuan (3.29 billion U.S. dollars), which were tasked with the goal of underpinning the private sector at home, according to the Asset Management Association of China.

The insurance sector is on the move too. Early November, New China Asset Management Corporation Limited started a plan to dedicate a total of 10 billion yuan (1.44 billion U.S. dollars) to helping listed private companies counter share pledging risks. A number of other insurers have also set up similar schemes.

Local governments are adopting market-oriented approaches to address the liquidity risks of private enterprises. Examples can be seen in provinces like Shandong, Anhui, Sichuan and Zhejiang, where huge funds are launched to help local private companies address their liquidity pressure and pursue further development.