Radford Taylor Partners - China to Develop Equity Financing Tool for Cash Hungry Private Sector

Radford Taylor Partners - PBoC promises to take steps to help struggling private sector businesses.

After a series of promises to overhaul capital support systems for companies in China’s private sector, China’s central bank chief recently announced that the People’s Bank of China (PBoC) will once again boost its efforts to supply capital to the private sector and that these efforts will include the development of an equity financing tool.

Andrew Powell, Head of Corporate Equity at Radford Taylor Partners says businesses in the private sector are still struggling to raise sufficient capital even after China’s government has pledged to offer more support.

In the world’s second largest economy, the private sector represents 60 percent of China’s GDP and provides as much as 80 percent of employment in urban areas. As China’s economy has shown signs of distress over the last several months as it faces an escalating trade war with the United States, Radford Taylor Partners’ Powell says it is unsurprising that many business owners are growing increasingly concerned about the government policies in place and their ability to offer support to the private sector.

Radford Taylor Partners analysts say that, over the last year, China’s central bank has pushed out more than $300 billion in liquidity by reducing the bank’s reserve ratio requirements several times. While China’s general liquidity is plentiful, PBoC chief, Yi believes it is necessary to take steps to increase the flow of capital for private companies.

Analysts at Radford Taylor Partners have blamed an unusual combination of problems for the slowdown in China’s once-booming economy and especially the private sector. The ability of businesses in the private sector to handle significant risks is decreasing, and subsequently, these companies are less willing to take risks given the current economic climate.

Source: Radford Taylor Partners