The State Council, China's Cabinet maps out measures to accelerate development of financial leasing on Wednesday, 26th August.[Photo: Xinhua]

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China's State Council has mapped out measures to accelerate the development of financial leasing and make it better serve the real economy.

A statement by the State Council on Wednesday believes stronger leasing services can provide capital to support investment on equipment and industrial upgrades.

The statement demands less red tape, including no minimum capital threshold for leasing companies to establish subsidiaries and easier procedures for leasing equipment like ships and farming machinery.

The statement also says development of leasing businesses involving high-end equipment imports and clean energy should be sped up.

It also encourages the establishment of leasing businesses for small enterprises and agricultural development.

Zhao Qianrong, manager of an agricultural machinery enterprise in east China's Anhui Province, says the encouragement of leasing is good news for manufacturing enterprises.

"This policy is helpful in expanding rural market and strengthening farmers' purchase power. With rural land circulation and intensive land management going on, large scale agricultural machinery is expected to have a promising future."

The statement by the State Council also calls for making good use of the Internet, establishing markets for trading of leases and second-hand equipment, and developing leaseback business.

Meanwhile, local governments are required to provide incentives and risk compensation to guide leasing businesses to better serve the real economy.

Wong Jianxing with Fuyin Financing Company believes leasing has great development potential in China.

"Many enterprises benefit from leasing, which plays an important role in solving problems like capital shortage and facility purchasing. In developed countries, the leasing penetration rate has reached 20%. However, our latest figure just stands at 4% ."

Stats show China had over 2000 financial leasing companies as of the end of last year, increasing nearly 1000 compared to the previous year.