Medium-sized and small enterprises have developed rapidly under China's reforms of the past 20 years. The industrial output value and taxation of such enterprises accounts for 65 percent and 40 percent, respectively, of the country's total.

Statistics show that over the past 10 years, 76.7 percent of China's newly added industrial value came from medium-sized and small enterprises, and these enterprises hold a leading position in most industries.

However, most medium-sized and small enterprises suffer from financing difficulties because of the lack of financial institutions specializing in supporting medium-sized and small enterprises and insufficient guarantee institutions, incomplete credit systems and lack of direct financing channels.

On June 29, the National People's Congress passed a law clearly stipulating that the state would protect medium-sized and small enterprises' legal rights and interest, that governments at different levels should give their fiscal support to such enterprises and that the state would set up a development foundation for such enterprises.

In addition, the law also urged the financial system to improve the financing environment for medium-sized and small enterprises and encourage risk investment institutions to increase input in these enterprises. The state would also adopt measures to expand direct financing channels for them.

The People's Bank of China, the central bank, has always urged commercial banks to readjust their credit structures and channel more loans to medium-sized and small enterprises. Over the past few years the central bank promulgated a series of guidelines, demanding commercial banks increase loans to such enterprises while effectively preventing financial risks and raising credit asset quality.

Incomplete statistics from the central bank show that over half of the country's total loans go to medium-sized and small enterprises, and most of those enterprises' reasonable credit demands can be satisfied.

President of the China Construction Bank Zhang Enzhao said earlier this week that his bank would adopt effective measures to reinforce financial support for medium-sized and small enterprises, and would design different credit policies for such enterprises indifferent regions and different industries.

The Industrial and Commercial Bank of China, China's largest commercial bank, had 212,000 clients of medium-sized and small enterprises and outstanding loans to these enterprises were 1.21 trillion yuan (US$146 billion), nearly half of its total loans.

The China Minsheng Bank, which is listed on the Shanghai stock market, has always positioned itself as a supporter of medium-sized and small enterprises. From 1998 to 2001, the bank's such clients increased from 1,442 to 12,280, up 851 percent, while outstanding loans increased from 7.7 billion yuan (US$931 million) to 58 billion yuan (US$7.01 billion), up 753 percent, accounting for 65 percent of its total loans.

Experts held that the development of medium-sized and small enterprises had produced job opportunities and played a significant role in social stability, the increase of exports and local governments' fiscal income. The improvement of financing environment would help promote their further development.

(Xinhua News Agency August 2, 2002)