The domestic financial leasing sector will continue to support supply-side reform by helping companies reduce excess production capacity, leverage and costs, an official of the banking regulator said on Thursday.
"The financial leasing sector is closely related to the real economy. The financial tool plays a significant role in upgrading industries and social investment, broadening small and medium-enterprises' (SMEs') financing channels and adjusting the economic structure," Mao Wanyuan, director of the Non-banking Department at the China Banking Regulatory Commission (CBRC), told a conference briefing.
Domestic leasing companies including ICBC Financing Leasing Co, Jiangsu Financing Leasing Co and China Huarong Financing Leasing Co have made progress in serving real economy.
ICBC Financing Leasing Co President Zhao Guicai said the company has three main businesses: aviation, shipping and large equipment leasing. For example, "the company has leased nearly 40,000 pieces of equipment, amid the country's 'One Belt, One Road' initiative and international production cooperation," he said.
China Huarong Financing Leasing Director Li Peng said the company has always focused on supporting SMEs. It has supported 5,124 SMEs since 2006, and that figure represents 75.63 percent of Huarong's total agreements, he noted.
However, analyst said the domestic financial leasing sector lags behind in terms of the variety of products and the professional level of its employees.
"In the country's financial leasing sector, around 70 percent of the leasing transactions are for assets, especially equipment, through sale-and-lease-back agreements. But this kind of transaction isn't complementary to banks' business because it is similar to collateralized loans," Wang Wen, research analyst at Guangfa Financial Holdings Investment Management Co, told the Global Times Thursday.
In addition, it is difficult for domestic companies to get financial leasing licenses, which intensifies competition among existing firms, according to Wang.
As of the end of the third quarter, China had 52 financial leasing companies, with total assets of 1.94 trillion yuan (9.2 billion), compared with 44 firms with assets of 1.64 trillion yuan in 2015, the CBRC data showed.