Financial lifeline boost for SMEs

Deng Haiqing, an economist with wallstreetcn.com, a business and financial information platform, said the guideline will enable more financing resources to flow to SOEs.

"Currently, too much financing resources are being concentrated on State-owned enterprises. The new policy will blaze new space for the financing of private enterprises and SMEs," he said.

However, Deng said it is also important for financial institutions to prevent the accumulation of new credit risks as small and micro-businesses are faced with higher risks of operation failures and lower capacities in risk prevention.

According to the guideline, SMEs will also receive support to use the capital market for financing, with the initial public offerings for such businesses set to be expedited. SMEs will also be incentivized to become listed in the National Equities Exchange and Quotations, better known as the New Third Board.

The guideline also called for accelerated efforts to give play to the national financing guarantee fund, as well as fee reductions during the financing process of SMEs.

Zeng Gang, a researcher on the banking sector with the Chinese Academy of Social Sciences, said the lack of willingness for SMEs to take loans from the banks is another pressing problem.

"Many SMEs dare not lend from banks because of their low profits," he said in an interview with Financial News, adding that it is important to adopt measures to enlarge the profit margins for businesses and boost their confidence to expand investment.

Wang, the vice-minister, said the authority will also encourage more social capital to invest in the equities of SMEs through the national fund for the development of SMEs, which has totaled 19.5 billion yuan ($2.9 billion) so far.

"We will work to ensure the fund can extend more support to the development of SMEs in their seed and startup stages," he said.