Small Financial Institutions Encouraged to Help Financing Small Enterprises

Financing is now one of the biggest obstacles facing small-scale companies here in China.

As such government financial departments are now getting set to help out smaller financial institutions better service this sector of China's business community.

Our Wang Jing has more.

Private enterprises that have registered with the commerce bureau now make up over 70 percent of all enterprises in China, and they are expanding at 14 percent every year.

But these companies are generally more vulnerable to market fluations, and are frequently hit by financing problems.
Huang Mengfu, chair of the All-China Federation of Industry and Commerce says they've now proposed that the government help promote grass-root financing institutions.

"We need to set up a financing system that is adaptable to small and micro companies. Individual investment shall be encouraged to take the lead in setting up township banks, small loan companies and small fund institutions in rural areas."

Lending money to small companies can be profitable.

Minsheng Bank, which gave out over 60 percent of their loans last year to private enterprises, currently only has a bad loan ratio of 0.7 percent, far lower than other commercial banks in China.

Its return on capital also tops its counterparts.

Zheng Xin from the Ministry of Industry and Information Technology, says over five thousand credit guarantee institutions have offered assurances to some 370 thousand small enterprises in 2009, and this is set to increase in the future.

"The current banking system will be improved to cater to the need of medium and small enterprises, new financial institutions specializing in offering small loans will be largely promoted, financial services need to be improved. Meanwhile, a credit and guarantee system needs to be set up among small companies."

About 890 million people have been employed in private enterprises though the end of last year.

For CRI, I'm Wang jing.