China will step up support for small businesses, unveiling new financial incentives for local banks to lend to those companies, according to a State Council meeting chaired by Premier Li Keqiang on Wednesday. Since early last year, Chinese authorities have introduced a raft of measures to support small businesses, which are vital for growth and jobs but have been hit harder by the COVID-19 pandemic. The government will shift the current loan repayment relief scheme for small firms, set to expire by the end of this year, to a new scheme. Under it, the People"s Bank of China (PBOC) will provide capital to local banking institutions to encourage them to lend to small businesses, according to the State Council, the country"s cabinet. The new scheme will run from the start of 2022 through June 2023. Authorities will also roll over a 400-billion-yuan relending quota that supports inclusive financing to small businesses, and boost relending quotas if necessary, and local banking institutions can apply for cheaper funds from the PBOC as an incentive, according to the State Council. "At present, small, medium-sized and micro firms and individual businesses are facing great difficulties," it said. "It is necessary to focus on the survival of market entities to respond to the new downward pressure on the economy and use market-based measures to step up the support for small business." The government will also ramp up support for manufacturing firms, which will have priority with the government"s tax and fee cuts policy and get more long-term loans, it added. Reporting by Stella Qiu and Kevin Yao Editing by Bernadette Baum Our Standards: The Thomson Reuters Trust Principles.