Beside this, according to CASME, other efforts include the joint issue of an SME corporate bond with the Liaoning provincial government and the founding of a bank with a planned registered capital of 10 billion yuan. The head of CASME said the bank will provide loans only to small- and medium-sized enterprises on the establishment of the fund. And for their development, they can get as much as 5 million yuan. But he didn’t mention when the bank will open. He also noted such fund will take effect on any industrial company with sales revenue up to 300 million yuan.

The major threat to SME’s survival is the difficulties raising capital. According to the National Development and Reform Committee, because of the economic downturn and a tight monetary policy, nearly 67,000 firms with sales income exceeding 5 million yuan shut down during the first half of this year. Shrinking loan supply from banks as well as rising costs should be the main causes to those closing down.

Li said it was obviously out of proportion when SMEs contributed 60 percent to China’s GDP but only got less than 25 percent of total bank loans. However, the country has searched the ways to help SMEs amid the financial crisis due to weakening demand at home and abroad as well.

The central bank raised loan quotas for national and regional commercial banks by 5 and 10 percent respectively in the second half of this year in order to help private firms ease their financial pressure. In addition, premier Wen Jiabao will put greater attention on challenges firms will face after he inspected them in Shanghai and Zhejiang province at the weekend.

He said: “More supporting policies should be available to create a sound environment for their development.”

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