With the enlargement of the special-purpose loan’s scale, the foreign trade enterprises begin to long for the looseness in the foreign exchange credit.

A director of a large shipbuilding enterprise in Jiangsu Province once told China Business News that they wished to get more foreign currency credit from banks; however, the foreign currency credit becomes hot rare resource because of the insufficiency in the money supply of the banks. So far as we know, when the foreign capital was insufficient in the first half of 2008, it was even difficult for some banks to normally develop the trade financing business.

As the commercial banks enlarge the scale of the special-purpose loan, some foreign trade enterprises and banks, which are insufficient in foreign capital, are longing to know whether any partial looseness will occur to foreign exchange credit.

Recently, People’s Bank of China has adjusted the credit scale of national commercial banks upward by 5%, and local commercial banks by 10%. “Nowadays, the credit of Renminbi has been loosened for small and medium-sized enterprises (SMEs) and agriculture. What about the foreign currency credit in the next step? It is hard for some foreign trade enterprises, especially the export-oriented SMEs. Can this be adjusted or not?” a director of the international department of a joint-stock bank said.

The government office of Zhejiang Province put forward in its newly released Advises on Promoting the Stabilization and Healthy Development of the Foreign Trade Industry in Zhejiang Province that commercial banks should strengthen their support to the foreign trade export-oriented enterprises, put in more foreign exchange credit into the market, and keep developing some financial business, such as the loan for the fiduciary export rebate account and so on. The commercial banks are also advised to actively expand the trade financing channel of the foreign trade enterprises, enlarge the business of the bill purchased, the confirming agent for export, and the export commercial invoice financing.

The export-oriented economy plays an important role in Jiangsu Province, Zhejiang Province and some other coastal areas. Many foreign trade enterprises are confronted with difficulties in their business under multiple stresses, and they have strong demand for the foreign currency credit. “The SMEs, especially the export-oriented ones, need not only Renminbi, but also US dollar,” said the above-mentioned bank director

Restricted by a series of measures, the increase of foreign exchange credit, after the explosive increase in the first two months of 2008, has rapidly fallen back to the relatively lower level. According to the statistics from PBC, the increase of the foreign exchange credit in the first two months of 2008 is respectively 16.9 billion USD and 21.7 billion USD, while the increase in June is only 1.4 billion USD.

There are many reasons for the rapid decrease of the growth rate of the foreign exchange credit. A person from the State Administration of Foreign Exchange (hereafter SAFE for short) said that the administration department published some measures against the problem that the increase of foreign exchange credit is too fast. For example, some control is exerted on the credit scale, and the money supply of foreign exchange of financial institutions is restricted, which can inhibit them from overdrawing capital form abroad to supply the domestic credit capital. In addition, the commercial banks use the foreign currency as the deposit reserve, which reduces a large amount of foreign exchange that can be used.

According to the above-mentioned bank director, a certain part of the foreign exchange resource must be used as overseas securities investment and some other non-credit investment. 

Recently, some evidence of becoming loose comes out in Renminbi credit and some other aspects. So the above-mentioned bank director are longing for the adjustment in the foreign exchange credit in the second half of 2008, such as some moderate adjustment in the putting-in ratio of the foreign currency assets of the commercial banks etc.

A person from a local Sub-Administration of SAFE held a different opinion. He thought that nowadays the balance of foreign currency credit was still larger than the one of foreign currency deposit. So relevant department will have certain control on the foreign exchange credit.