China Moves to Facilitate Financing For SMEsLu Shuanghui, chairman of the Shenzhen-based Huida Business Development Co. Ltd., is badly in need of 20 million yuan (some 2.4 million U.S. dollars) in funds to produce a bio-tech instrument, a "marketable product" his company developed."We have been making applications to several banks for the loan for a couple of months, but have got no money from them," the small high-tech firm executive said Wednesday at the on-going APEC Small and Medium-sized Enterprises Bushiness Forum in Shanghai. Lu's complaint about the ineffective financing was echoed by many of the forum participants who are executives of small and medium-sized enterprises (SMEs) and have had similar experiences to him. A recent sample survey conducted in Shanghai shows that 69 percent of the 1,000 local SMEs surveyed have encountered difficulties in getting bank loans. In Beijing's Zhonguancun, a high-tech center reported to be attractive to financial institutions, as many as 8,000 high-tech SMEs are thirsty for a total of 27 billion yuan in funds, but only 400 of them have received 1.6 billion yuan in bank loans. What is encouraging to Lu is his company has got special financial aid of 1.5 million yuan from the government. "It is a good beginning to our financing effort though the sum is still far from what we want," he said. In fact, ineffective financing for SMEs has aroused concern from the Chinese government. Li Rongrong, minister in charge of China's State Economic and Trade Commission and chair of the current APEC SME ministerial meeting, said related Chinese government departments are considering launching a credit system for SMEs. Some breakthroughs in improving the financial service system for SMEs are expected at a national meeting on financial work to be called soon, he said. The draft SME promotion law, the first of its kind in China, will be submitted to the country's top legislature for consideration this December. If adopted, the law will play a great role in settling the difficulties SMEs have encountered in getting funds for development, Li said. China has so far established 260 credit guarantee institutions for SMEs, which have raised 7.6 billion yuan in guarantee funds by the end of June this year. In 1999, the Chinese government set up a one-billion-yuan special fund to boost SMEs' technological innovation. Despite all these measures, most forum attendants say much remains to be done to improve the services of the less market- oriented state-owned banks, and upgrading the credit rating of SMEs. They called on the government to take comprehensive measures, including energetically fostering small and mid-sized financial institutions serving SMEs, giving more financial support to SMEs, and developing SME credit guarantee funds. |
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