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More but smaller loans to China's SMEs in H2
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16:05, August 24, 2009

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In the second half of 2009, China's credit policies will not only focus on controlling the total quantity of new loans, but also structural adjustment, said Tang Min, deputy secretary-general of the China Development Research Foundation.

In the first half, 7.73 trillion yuan of new loans were issued in China, exceeding the total issued during the whole of 2008. Small and medium-sized enterprises (SMEs) and small companies in particular, did not receive many new loans however.

That means the massive loans did not really benefit SMEs, whose recovery is of crucial importance to employment and the sustainability of economic growth.

Therefore, the priority of the current adjustment to economic policies lies in when to adjust the scale of new loans in the second half and how to switch the focus of bank loans to small enterprises, agriculture, the countryside, farmers, and individuals.

Without the support of policies and certain measures to stimulate commercial banks, these banks will not voluntarily issue new loans to these areas.

Secondly, the scale of new loans issued to infrastructure construction should also be controlled. Banks must be prevented from issuing excessive new loans to local investment companies, which may not have sufficient assets.

Thirdly, an asset bubble must be prevented. Measures should be adopted to prevent large quantities of credit capital from entering the stock and real estate markets.

Data on new loans from the first half should be examined and illegal behavior should be dealt with timely. Moreover, special effort should be made to prevent new loans from entering the stock and real estate markets.

By People's Daily Online

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