A new method for small business owners to gain the favour of bank managers and obtain credit is emerging amid China’s push to support the real economy: Studying Chinese President Xi Jinping thought and promoting the Communist Party.

Zhejiang Taida Miniature Electrical Machinery Co, a producer of ventilating fans, this year received a so-called red impetus loan of 3 million yuan ($447,000), said chairman Qiu Rongquan at the company’s booth at the bi-annual Canton Fair, billed as the world’s largest trade forum. The loans are granted to companies that have solid businesses after doing good work promoting the Communist Party, he explained.

Huzhou city government, which oversees Deqing county where the company is based, said in an April 11 statement that the loans are guarantee and collateral free, with reduced interest rates to help private companies develop. Qiu said his company received the loan at the benchmark interest rate, whereas it would usually pay 20 to 30 per cent above the rate.

China’s government has ramped up support for the economy in recent months, bringing forward spending and trying to channel cheap credit to private businesses. Thats helped stabilise economic growth and underpin sentiment that has been slugged by uncertainty stemming from the trade war with the US.

While the private-enterprise-focussed stimulus is a departure from past policies that typically revved up investment and state-owned firms, the “red impetus loans” underscore the fact that the government and party remain active players in steering credit.

Study Xi

Qiu said he began improving his company’s work promoting the party about four to five years ago and now it has 12 party members out of its 170 employees. He encourages employees to use Xue-Xi-Qiang-Guo, or Study Xi to Strengthen the Country, an app that promotes President Xi’s ruling doctrines, he said.

“The party building work has paid off,” said Qiu. “We have got the government support. It means a lot.”

The red impetus loan may help with Qius plan to invest 5 million yuan this year on research and development, upgrading machinery and attracting talent.

He is striving to close the quality gap on his major competitors in Germany and Taiwan, and aims to increase the company’s share of the global market from about 10 per cent now to 30 per cent at some point in future, said Qiu.

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