CRI听力:Small and Micro Firms' Financing Difficulty Waits to be Solved

As CPPCC member Liu Kegu explains, small and micro enterprises' financing difficulties have been a continuous problem due to an imbalance in banking industry structure. The issue was revealed last year, thanks to changes in statistical methods and research.

"Last July, the relevant departments of the central government divided SMEs into medium, small, and micro firms. Then, the government put medium and large enterprises together and put small and micro firms together. Now people can see that the financing difficulties lie mainly in small and micro firms. And the reason is an imbalance in the structure of China's financial sector. Many financial institutions provide services for large enterprises, but very few serve the small and micro firm market."

The Chinese government already introduced a series of measures to support small and micro firms in recent years, including setting up funds, tax relief and financing.

However, many small and micro enterprises suffered capital shortages which intensified last year amid tightening policies. According to a report about micro enterprises, 43 percent of the interviewed enterprises in central China said they were "nagged" by capital shortages.

As one might expect, solving this problem has attracted a great deal of attention as well as suggestions from CPPCC members. Li Ruguo, president of the Import-Export bank suggests setting up more small banks and restricting their coverage.

"A good way to solve the problem is to set up more small and medium-sized banks and local banks. These banks should not be allowed to set up branches nationwide. Nowadays, there are some local banks and city commercial banks setting up branches everywhere and expanding into nationwide banks. When that happens, the support they provide for local firms is weakened."

Liu Kegu, the former vice-president of China Development Bank proposes to greatly advance the development of "credit only" microcredit companies to help fund small and micro firms, and allow the microcredit companies to issue bonds to broaden their funding abilities.

Advisor Zhu Chenggang, who is also vice-director of Jingan District of Shanghai, gave advice from the government's point of view.

"It had better for the government to leave micro economic activities alone, as a government that aims for tax revenue and GDP growth will not be interested in helping SMEs. This is because SMEs contribute the most to creating jobs, not creating tax revenue."

This year's CPPCC session finishes on Tuesday, but a solution to this problem has yet to be seen.

For CRI, this is Ding Lulu.