BEIJING/SHANGHAI: China’s state-owned automaker FAW Group said it signed a deal with 16 banks for a credit line worth over 1 trillion yuan ($144 billion) but did not give specific reasons as to why it wanted to secure access to such a large amount of funding.
FAW said in a posting on its social media account it wanted to consolidate its cooperation with banks, create an open and innovative financial platform and to secure funds for FAW initiatives in the future.
The credit line is part of a government plan to revitalize the economies of China’s northeastern provinces, a FAW source said, declining to be identified as the source was not authorized to speak publicly on the matter.
China’s National Development and Reform Commission announced a plan in January to boost the rustbelt northeast, the latest in a long line of efforts to help the area, but the announcement did not mention FAW at the time.
Shares in two FAW units, FAW Car Co Ltd and Tianjin FAW Xiali Automobile Co Ltd, jumped by their daily limit of 10 percent after the news of the credit line.
FAW has a joint venture with Volkswagen which produces VW and Audi cars, and one with Toyota, which builds the Crown and Corolla models.
The 16 banks in the agreement with FAW include China Development Bank, China Construction Bank, Bank of China and the Industrial and Commercial Bank of China.
China’s economy in the third quarter slowed to its weakest quarterly pace since the global financial crisis, data last week showed, hurt by the weakest factory output since February 2016 as carmakers slashed production due to a sales slowdown.
The figures came as regulators move quickly to calm nervous investors as a years-long campaign to tackle debt risks and the trade war with the United States began to bite.
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