Economic growth in the first quarter fell to its slowest rate in six years, prompting the People's Bank of China (PBOC) to cut how much banks must keep in reserve by 100 basis points on Sunday, the biggest cut since 2008, in a bid to get banks lending more.
Growth in Hebei slipped to 6.5 percent last year, one of the lowest rates in the country, and Premier Li told the province's delegation to the annual parliament last month that central government should help out with preferential financing policies.
"Hebei is enjoying favorable financing support due to its proximity to the capital and the urgency of cleaning up air pollution," said Chen Bo, economist with the Central University of Finance and Economics.
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The Hebei government would not comment for this story but has previously said banks had pledged a further 761.3 billion yuan to help develop the private sector in the province.
The PBOC also cut reserve requirements for the Agricultural Development Bank, a policy lender, by an additional 200 bps.
"This is because of a State Council meeting after the spring festival, which called on ADBC to increase support to the bridge loans for major national water projects," a bank executive said.
Winners and losers
Hebei's steel mills have to comply with tough state pollution standards by the end of the year, but with cash scarce and demand weak, firms are struggling to comply.
Neither the reserves cut nor the financing package is expected to rescue Hebei's worst-performing firms, but it could help favored enterprises pay for upgrades and cover higher compliance bills.
Hebei said banks would provide 35 billion yuan to help cover the 100 billion yuan cost of renovation at 32 major steel enterprises in the province, and said the entire financing deal would alleviate risks for "enterprises that have a market and are competitive but are temporarily experiencing difficulties".