Beijing tells banks to lend more to small business as economy slows even before US tariffs start to bite  

Financial agency says system needs to ¡®create new dynamism¡¯ for growth as it tries to head off risks to jobs and economy from trade war with Washington

The government financial committee led by Vice-Premier Liu He has ordered China¡¯s banks to lend more to small business as Beijing tries to head off growing risks to jobs and growth from a trade war with Washington.

After its second meeting under Liu, the Financial Stability and Development Committee ¨C the agency in charge of coordinating financial policies ¨C said the system needed to ¡°create new dynamism¡± for growth and that banks must improve their internal mechanisms to encourage lending to small business, according to a statement on Friday.

While small businesses are vital to employment, they are also vulnerable to external shocks. The latest purchasing managers¡¯ survey published by Caixin magazine on Friday showed that growth in the service sector, which contributed about 60 per cent of China¡¯s economic growth last year, slowed further in July. The outlook for the economy among Chinese managers fell to its lowest level in almost three years ¨C even before US tariffs on Chinese exports started to bite.