China is steadily promoting the interest rate liberalization, and will further propel the integration of market interest rate with benchmark lending rate, said Liu Guoqiang, deputy governor of the People's Bank of China, on Thursday. 

The country will continue to implement a prudent monetary policy so as to create a monetary and financial environment that is beneficial to reducing the financing cost of micro and small enterprises (MSEs), Liu said.

The central bank will formulate inclusive credit plan dedicated to MSEs, increase financial support and lower the financing costs for MSEs through government-backed financing guarantee, Liu added.

Liu added they will also guide the banks to increase the proportion of credit-based loans, and reduce the excessive dependence on collateral guarantee. More efforts will be made to overhaul the intermediary fees, including surcharges for collateral registration, asset evaluation and bridge loans, to ease the financing burden on businesses.

China will work to further reduce financing cost of MSEs, with an aim to increase outstanding loans offered by five large State-owned commercial banks — the Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of China, China Construction Bank, and Bank of Communications — to MSEs by more than 30 percent this year compared with 2018, according to a State Council executive meeting chaired by Premier Li Keqiang last week.

The goal of capping the guarantee rate at 1 percent for MSEs with a guarantee volume of five million yuan ($743,200) or below, and 1.5 percent for those with a volume above five million yuan, must be achieved across the country as soon as possible.