Two workers assemble a drone in a workshop at Xianghe, north China's Hebei province, April 23, 2019. (LU PENG/XINHUA)

BEIJING - China will further support its small and medium-sized enterprises (SMEs) to mitigate the impact of the COVID-19 epidemic while increasing local government bond issuance to shore up effective investment, according to a State Council executive meeting Tuesday.

READ MORE: China announces reserve ratio cuts to bolster economy

The meeting, presided over by Premier Li Keqiang, decided that the re-lending and re-discount quota for small and medium-sized banks will be expanded by 1 trillion yuan (about US$141 billion).

The country will further implement the reserve requirement ratio cuts for small and medium-sized banks and guide them to offer loans to SMEs at favorable interest rates, according to a State Council executive meeting

The country will further implement the reserve requirement ratio cuts for small and medium-sized banks and guide them to offer loans to SMEs at favorable interest rates, according to the meeting.

Private businesses and SMEs are also encouraged to raise funds through bond issuance and accounts receivable financing, the meeting said.

The meeting also decided to increase the issuance of local government special bonds to support effective investment, stressing that priority should be given to regions with major projects and low risks.

The country will assign some of the local government special bond quotas ahead of schedule and local authorities should strive to issue the bonds by the end of the second quarter, the meeting said.

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The meeting stressed efforts to enhance support to people on low incomes, especially those in difficult circumstances, and decided to raise certain subsidy standards and expand the coverage of subsistence allowances and other relief policies to help those affected by the epidemic.

China will also extend subsidies and tax exemptions for new energy vehicle purchases by another two years in a bid to boost auto consumption, the meeting decided.