中小企业融资困难

SMEs in China contribute around 60% of the country's GDP, and provide more than 80 percent of jobs. But the financing support they get -- about 20% of bank loans, is in stark contrast to their economic role. Michelle Xing spoke with the president of SME association on ways for SMEs to get financing.

SMEs -- are critical to China's growth. But their own growth is limited by funding challenges. Direct financing is still difficult. Medium and large banks have little incentive to lend to SMEs. Li Zibin, President of the SME Association says, the government should encourage the development of small local banks.

Li Zibin, President, China Sme Association, said, "800 to 1000 local banks have been established since 2008. They played a huge role in supporting businesses in regions where large banks cannot reach. Small moneylenders have limited funding and most are not used to fund small and micro businesses but borrowed at a very high interest rate for a short period of time to repay larger banks. Therefore, our focus should be to develop small local banks to fund SMEs and keep these banks local."

China encourages companies to reduce their reliance on bank loans and tap the bond market for funding. Li says SMEs should focus on private placement bonds and financing leases.

Li Zibin said, "China’s corporate bond market has expanded in recent years but its mostly limited to bigger companies. Some authorities have issued private placement bonds to support SMEs. I think we expanding the bond market further and developing financing leases are great ways to help SMEs, it should be our priority."

Private equity investments are another channel of capital for SMEs. But private equity funds have found it hard to exit their investments as the stock market languishes and IPOs remain suspended. Li says this is temporary. In the long run, private equity funds will play a huge role in funding SMEs.