1. Q: What are the purposes of increasing the quota of the special central bank lending for the clean and efficient use of coal by RMB100 billion?
A: In November 2021, in line with the requirements of State Council executive meetings, the People’s Bank of China (PBC) set up a special central bank lending facility of RMB200 billion for the clean and efficient use of coal (hereinafter referred to as the special central bank lending) to provide support to seven areas, including safe, efficient, green and smart coal development. Since the introduction of the special central bank lending, it has played a positive and productive role in safeguarding China’s energy security and driving China towards its “dual carbon” goals in a scientific and orderly manner.
At present, the world is undergoing complex changes and global energy prices are fluctuating at high levels, posing greater uncertainties and challenges to China’s energy security and economic stability. As arranged by the State Council, the PBC increased the quota of the special central bank lending by RMB100 billion to support coal development and use, and boost the coal reserve capacity, which could help the country fully tap into the rich endowment of coal resources, secure the stable supply of energy, sustain the stability of industrial and supply chains, and support China’s economy to perform within a reasonable range.
2. Q: What are the target areas of the additional RMB100 billion quota?
A: The additional RMB100 billion of the special central bank lending is targeted at areas related to coal development and use, and those related to enhancing the coal reserve capacity. First, it will support the safe production and reserve of coal, including the construction of modern coal mines, the application of green and efficient technologies, the construction of smart coal mines, the transformation towards safe coal mines, coal washing, and coal reserve capacity building. Second, it will support the supply of thermal coals for enterprises that generate power from coal.
Financial institutions should give priority to projects related to the safe production and reserve of coal in lending. Regarding the second area, financial institutions may apply for the special central bank lending in line with relevant requirements to support loans issued to enterprises in the coal-fired power generation sector as the working capital for coal purchases.
3. Q: How will the additional RMB100 billion of special central bank lending be implemented?
A: It adopts a “reimbursement” mechanism whereby financial institutions are “reimbursed” on a monthly basis. Financial institutions, fully subject to the decision-making of their own and at their own risk, grant preferential loans to eligible projects in the aforementioned two areas at a rate close to the most up-to-date loan prime rate (LPR) of the same maturity or at a lower rate if the borrowers’ credit profile permits. For eligible loans, the PBC will provide the funding in full amount of the loan principal through the special central bank lending.
