BEIJING, (Reuters) – China’s central bank announced Thursday that it will promote credit to smaller businesses and increase financial institution confidence in lending funds. This is as the policymakers try to bring back the COVID-stricken country’s economy on its feet.

The People’s Bank of China issued a warning to national banks urging them to give priority to lending to the central and western regions of China, and to those areas and industries that are most affected by COVID-19.

The extended lockdowns that were implemented in many cities including Shanghai’s commercial centre have spurred production and consumer spending. China’s economy declined sharply in April. The nationwide survey-based rate of unemployment rose to 6.1%. It is now the highest point since February 2020.

Many analysts think the economy may have contracted in Q2. They also reduced their full year growth projections.

In a flurry PBOC notifications on lending, this was just the latest of a series of recent statements made by authorities to help companies get back on track. The April low in new Chinese bank lending was the most severe in four and a half years.

The PBOC stated that it was working to increase the ability of financial institutions and small businesses to be served, and to lower funding costs in order to stabilize economic growth.

The notice stated that “Fault tolerance should be increased and risk mitigation systems improved in order to increase the confidence to lend.”

Although small firms make up the backbone of the second-largest economy in the world and are a key source of job creation, they were also the most affected by the stringent anti-virus policies and disruptions to supply chains.

China’s cabinet has announced an array of policies to boost the economy. They include tax credit reductions that are larger and delayed social security payments.

Premier Li Keqiang stated during Wednesday’s nationwide teleconference that China would strive for reasonable economic growth and to stem the rising rate of unemployment.