BEIJING • A new method for small business owners to gain the favour of bank managers and obtain credit is emerging amid China's push to support the real economy: studying President Xi Jinping's thought and promoting the Communist Party.
Zhejiang Taida Miniature Electrical Machinery, a producer of ventilating fans, this year received a so-called "red impetus loan" of 3 million yuan (S$606,500), said chairman Qiu Rongquan at the company's booth at the bi-annual Canton Fair, billed as the world's largest trade forum. The loans are granted to firms that have solid businesses after doing good work promoting the Communist Party, he said.
The Huzhou city government, which oversees Deqing county where the firm is based, said in a statement that the loans are guarantee-and collateral-free, with reduced interest rates to help private firms develop.
Mr Qiu said his firm received the loan at the benchmark interest rate, whereas it would usually pay 20 to 30 per cent above the rate. China's government has ramped up support for the economy in recent months, bringing forward spending and trying to channel cheap credit to private businesses. That has helped stabilise economic growth that has been hit by uncertainty stemming from the trade war with the United States.
While the private enterprise-focused stimulus is a departure from past policies that typically revved up investment and state-owned firms, the "red impetus loans" underscore the fact that the government and party remain active players in steering credit.
Mr Qiu said he began improving his company's work promoting the party about four to five years ago and it now has 12 party members among its 170 employees.
He encourages employees to use "Xue-Xi-Qiang-Guo" or "Study Xi to strengthen the country", an app that promotes President Xi's ruling doctrines, he said. "The party building work has paid off. We have got the government support. It means a lot," said Mr Qiu.
The "red impetus loan" may help with his plan to invest 5 million yuan this year on research and development, upgrading machinery and attracting talent. He is striving to close the quality gap on his major competitors in Germany and Taiwan and aims to increase the firm's share of the global market from about 10 per cent now to 30 per cent in future, he said.