BEIJING, PEOPLE’S REPUBLIC OF CHINA (3 November 2021) — The Asian Development Bank (ADB) and Zhujiang Financial Leasing Company Limited (ZFL) signed a $40 million loan equivalent to CNY258 million, to expand the company’s long-term lease funding for small and medium-sized enterprises (SMEs) in the People’s Republic of China (PRC).
A parallel loan for $40 million also in CNY equivalent from Deutsche Investitions- und Entwicklungsgesellschaft mbH (DEG) was signed at the same time.
“ZFL’s strong development focus is uniquely aligned with ADB’s goal of fostering a better business environment in the region,” said ADB Vice-President for Private Sector Operations and Public-Private Partnerships Ashok Lavasa. “This assistance will provide crucial financing for smaller businesses in regional areas as they rebound from the impacts of the pandemic, thereby helping to create jobs, particularly for migrant workers. We are also delighted to be partnering with DEG to provide a large funding package to ZFL.”
Despite their importance for job creation and economic growth, SMEs face significant barriers to credit from financial institutions. Lease financing bridges these gaps, especially for procuring manufacturing equipment, which is generally not accepted as collateral by commercial banks. By providing longer-tenor finance, this project will support the development of the financial leasing industry in the PRC.
The project will target SMEs outside the four most developed cities—Beijing, Guangzhou, Shanghai, and Shenzhen—in an effort to promote more inclusive growth. The ADB and DEG loans will also support ZFL to pilot a new lease finance product targeting micro businesses.
“The ADB and DEG loans will support ZFL’s SME finance operations, which are aligned with government policies and directly addresses SMEs’ financing bottleneck especially in terms of access and costs. This project will further promote the development and economic growth in the PRC,” said ZFL President Dan Yi.
Established in 2014, ZFL is a wholly owned subsidiary of Guangzhou Rural Commercial Bank, one of the PRC’s leading rural commercial banks. ZFL had total assets of CNY18.7 billion and finance to SMEs accounted for 59% of its total outstanding lease portfolio as of 30 September 2021.
ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 68 members—49 from the region.