China loans more to small businesses to boost employment

China loans more to small businesses to boost employment

SHANGHAI (AFP) — China’s central bank has more than doubled the amount entrepreneurs and small businesses can borrow as part of efforts to boost employment, officials said.

The maximum amount that can be loaned to individuals for business purposes was raised to 50,000 yuan (7,300 dollars) from 20,000 yuan, the People’s Bank of China said in a statement posted on its website late Monday.

The limit on loans to labour-intensive small businesses was doubled to two million yuan from one million yuan, according to the notice distributed to local authorities and banks earlier this month.

“(We) need to enhance the policy support for labour-intensive small enterprises, prompt them to hire more jobless people,” the central bank said.

Some small businesses in China have been forced to shut down after being hit by slowing export growth and the government’s tighter credit conditions aimed at fighting inflation.

The large number of small businesses going bankrupt — many of them focused on labour-intensive products for export like textile and toys — has raised unemployment and concerns about possible social instability.

Beijing has long said the official unemployment rate remains below five percent.