As Guangdong rolls out an ambitious blockchain-based financial and regulatory platform, local governments are casting further light on how it fits into a bigger scheme of the state providing better support to companies in the private sector. Zhaoqing, one of the Greater Bay Area’s smaller economies, yet with the most room to grow, has leaped in with both feet, rolling out a package of 10 measures to support SME development.
The first of these is focused, naturally, on strengthening supervision by adopting “live monetary policy tools”, i.e., using the new blockchain system to get companies more transparent about their financial affairs. But the second measure is designed to reward them by getting the banks to reduce their financing costs to SMEs, using their intellectual property as collateral. The third measure is to improve the “docking” system between banks and companies – no surprises there – but the fourth and fifth are more interesting. These are aimed at pushing more companies toward preparing themselves to tap the capital markets directly by issuing bonds, and then by issuing equity.
The document doesn’t explicitly say so, but the end-goal seems clear: Once SMEs are better regulated and better financed, get them off the governments hands and let the markets run.
For all of this to happen, it would be better if the insurance industry were not left out of the loop. Thankfully, Ping An’s OneConnect subsidiary is a key provider of tech services in the blockchain project, so no need to worry about that. Still, measure No. 6 in Zhaoqing is aimed at supporting the growth of the small-loan guarantee business and various other aspects of the SME universe where provision of insurance is key.
Measures 7 to 10 are all about improving the system by using government money and leadership to improve supply-chain finance overall throughout the province, with Zhaoqing playing its role in this regard.
The document is full of jargon, but worth reading via machine translation.