200 Billion Yuan in Subsidized Loans: Prioritizing Domestic Brands

Recently, the scientific instrument industry has received unprecedented good news. The government has released policies such as interest subsidies and relending for equipment upgrades and renovations to support the upgrading and renovation of equipment in weak areas of economic and social development, requiring relevant applications to be completed by the end of the year. The sheer scale of procurement and the tight procurement cycle have stirred excitement among industry insiders.

On September 28, the People's Bank of China announced the establishment of a special relending program for equipment upgrades and renovations. This program specifically supports financial institutions in providing loans at an interest rate not exceeding 3.2% to manufacturing, social services, small and micro enterprises, and individual businesses for equipment upgrades and renovations. The special relending program for equipment upgrades and renovations has a quota of over 200 billion yuan, specifically supporting equipment purchases and upgrades in 10 sectors including health and education.

On September 29, the Ministry of Finance, the National Development and Reform Commission, the People's Bank of China, the National Audit Office, and the China Banking and Insurance Regulatory Commission jointly issued the "Notice on Accelerating the Fiscal Interest Subsidy Work for Loans for Equipment Upgrades and Renovations in Certain Sectors" (Caijin [2022] No. 99), further promoting the implementation of interest subsidy loans and setting a timetable. Loans for equipment upgrades and renovations newly issued before December 31, 2022, will receive a 2.5 percentage point interest subsidy, with a term of two years [a preferential loan rate of 3.2% would be reduced to 0.7% after deducting the subsidy]. The People's Bank of China (PBOC) has also introduced a supporting relending program with an interest rate of 1.75%, which can be extended to three years.

This policy has ignited a surge in loan demand and equipment procurement by universities across the country. Given the significant support and short timeframe of this policy, industry insiders are closely watching which types of special relending projects for equipment upgrades and renovations will be prioritized for approval.

Recently, a document titled "Key Points of the Equipment Upgrade and Renovation Loan Policy" has been circulating online, clearly outlining the key review criteria for special relending projects for equipment upgrades and renovations by the PBOC.According to the screenshot, the PBOC will prioritize loan projects that meet the following conditions: 1) purchasing domestically produced brand equipment; 2) purchasing equipment listed in the "Guidance Catalogue for the Promotion and Application of the First Set of Major Technical Equipment"; and 3) the borrower using at least 20% of its own funds to pay for the equipment purchase.

Furthermore, the key review criteria for loan projects submitted by banks for relending by the People's Bank of China include: projects must be strictly limited to the list of candidate projects reviewed by the National Development and Reform Commission and forwarded by the People's Bank of China; the signing date of the equipment purchase or renovation service procurement contract and the loan disbursement date must both be between September 1 and December 31, 2022, and the loan term must not be less than one year.

The total loan amount must not exceed the loan demand amount listed in the candidate project list, and cannot be used for purposes other than equipment purchase or renovation service procurement; the loan interest rate within the relending and fiscal interest subsidy policy support period (3 years) must not exceed 3.2% and must not be lower than 2.5% (at the fiscal interest subsidy level).

Recently, a "Minutes of Exchange between University Procurement Experts" published online also confirms this news. The minutes state that the official policy emphasizes: in principle, domestically produced instruments should be procured; the procurement of imported instruments must undergo expert evaluation. This undoubtedly injects a "strong boost" into domestically produced instruments and benefits the entire domestic scientific instrument market.