Illegal activities in markets 'will not be tolerated'

Financial entities must resolutely safeguard investor interests, tighten market discipline and observe a “zero tolerance” policy on illegal practices in the capital market, said China’s top financial committee headed by Vice Premier Liu He on Monday.

The State Council’s financial stability and development committee called for “zero tolerance” on counterfeit behavior in the capital market, a resolute crackdown on financial fraud, insider trading, market manipulation, and other violations of laws and regulations.

This came after a number of US-listed Chinese companies were found to have engaged in financial fraud, including coffee chain brand Luckin Coffee and TAL Education Group.

China’s stock, bond and foreign exchange markets have also generally kept smooth operations despite the turbulent global financial market, Monday’s meeting said, noting the importance of reasonable and sufficient liquidity.

However, the meeting pointed out that it is necessary to pay close attention to the risks of some financial products caused by current price fluctuations in international commodities markets. It called on financial institutions to raise risk awareness and strengthen risk management and control.

Amid high uncertainty over the negative impact of the COVID-19 pandemic and economic slowdown, China’s financial sector has taken great efforts in supporting the real economy, especially small businesses, the meeting said.

Both fiscal and financial measures have been harnessed since the start of this year, such as tax and fee cuts, financial support and assistance to help businesses, especially smaller ones, to overcome difficulties.

In terms of tax and fee cuts, value-added tax relief was introduced for micro and small-sized enterprises and self-employed businesses. The export tax rebate for selected products was raised, while the loss carry-forward period for companies in transportation and hospitality was extended.

Meanwhile, employers’ social insurance contributions were temporarily lowered or waived, and payments to the housing provident fund were deferred. Roads and expressways were made toll-free, and electricity and gas rates for enterprises were cut.

These measures, together with the carry-over effect of last year’s tax and fee reductions, are expected to lower business costs by 1.6 trillion yuan (US$226.6 billion).

In addition, part of the 2020 quota of local government special bonds totaling 1.29 trillion yuan was allocated in advance.

In terms of financial support, the three cuts in the required reserve ratio, and re-lending and re-discount rates provided financial institutions with 3.55 trillion yuan of low-cost capital to issue low-interest loans to businesses. As of the end of March, some 880 billion yuan of principal and interest payments of corporate loans had been deferred.

Additionally, relevant departments have formulated work plans for deepening reforms and replenishing capital of small and medium-sized banks.