After a report quoted the loan rejection rate for China’s small- to medium-sized enterprises (SMEs) as 56 per cent, Ou Xinqian, vice director of the State-owned Assets Supervision and Administration Commission (SASAC), said that the absence of financing channels has been the major growth obstacle for SMEs.
"Most SMEs, especially private firms, want to boost investment, but shrinking sources of normal financing channels have forced them to rely on irregular borrowing, increasing their financial burdens," Ou said.
Bank loans and capital market fund raising are typically reserved for large state-owned enterprises in China as the government seeks to restructure the old command economy while avoiding the potentially destabilising effects of a large scale dismantling.
In the process, the country's SMEs - often the most promising in China's corporate universe - have been starved of capital and forced to look at sometimes questionable means of raising money.
