FAW Group, the state-owned auto firm known for its limousines used by officials and diplomats, will benefit from an unprecedented credit package from Chinese state lenders at the behest of the central government, Caixin reports.
The Jilin-based firm will receive Rmb 1.02 trillion ($147 billion) from over two dozen Chinese banks, at a time when Beijing is being pressured to proffer greater financial support to businesses.
China’s auto market – the world’s largest – has been hit by the widespread cooling in the economy and is on track for its first annual sales decline in two decades. FAW’s sedan unit forecasts a 60% profit drop for the first three quarters of the year to RMB 115 million.
The banking consortium behind the new loans includes policy lender China Development Bank and commercial banks China Construction Bank and China Industrial and Commercial Bank, sources told Caixin.
Each bank will extend between Rmb 50 billion and Rmb 80 billion in credit for “business transformation and development,” said one source.