Reuters reported, citing Xinhua news agency, that China's state council said on Thursday it aims to reduce private firms' financing costs to reasonable and stable levels and improve their ability to raise funds through various measures, including issuing bonds.

“The private economy plays an irreplaceable role in stabilising growth, promoting innovation, increasing employment, and improving people’s According to the cabinet, recent policy measures have achieved some results, but some private firms still struggle to receive funding, and financing costs remain high for them.

Efforts will be made to improve monetary policy transmission mechanisms to make banks more willing to lend to private firms, which are considered riskier than state-backed firms, the cabinet said. 

The government will also encourage financial institutions to increase investment in debt issued by private firms and improve the effectiveness of the central bank’s targeted reserve requirement ratio (RRR) cuts for banks to help private companies.

To free up more funds for lending, particularly to vulnerable smaller firms, the People’s Bank of China (PBoC) has cut RRR (the amount that banks need to set aside as reserves) five times over the past year.

Further reserve reductions are expected in coming quarters, alongside tax cuts and increased infrastructure spending to support a slowing economy hurt by a trade war with the U.S.

Regulators will speed up approvals for private firms’ initial public offerings and refinancing activities, and allow such firms to issue convertible bonds, the cabinet added.