Abstract This year, the Ministry of Industry and Information Technology (MIIT) is launching a "Special Action for Small and Micro Enterprises" aimed at boosting the growth of innovative, entrepreneurial, and labor-intensive businesses. The initiative seeks to address pressing challenges such as talent recruitment and access to financing that many small and medium-sized enterprises (SMEs) face. This effort reflects the government’s growing recognition of the critical role SMEs play in driving economic development and employment.
Xu Kemin, Deputy Director of the SMEs Department at MIIT, highlighted these concerns during an interview with the “China Voice†program on the Central People's Broadcasting Station. He emphasized that financing difficulties remain one of the most significant obstacles for small and micro enterprises. According to Xu, these businesses often rely heavily on credit, yet their demand for loans far outpaces the available supply. Additionally, due to limited collateral and high operational costs, banks tend to charge higher interest rates, which can discourage lending to smaller firms.
To tackle these issues, Xu noted that this year’s plan includes accelerating the construction of a comprehensive SME service system. This will involve promoting public service platforms, encouraging resource sharing, and enhancing collaboration between different service providers. Improving access to credit, broadening financing channels, and organizing more financing matchmaking events are also key components of the strategy.
On the same topic, Zhu Hongren, Chief Engineer at MIIT, spoke at the Financial and Economic Strategy Annual Meeting of the Chinese Academy of Social Sciences on December 29, 2012. He pointed out that while efforts have been made to ease the financial burden on small enterprises, there are still significant gaps. One major issue is the mismatch between the financial resources allocated by large institutions and the actual needs of small businesses. At the same time, he stressed that SMEs themselves must improve their internal capabilities and financial health to better qualify for support.
Zhu also noted that smaller companies with lighter asset bases often struggle the most when it comes to securing funding. Some fail to meet basic requirements, while others stop at the initial stages of the process. Despite their large numbers, SMEs continue to face challenges like high operating costs, reduced orders, difficulty in hiring, and heavy debt burdens. Among these, financing remains a recurring problem that is hard to resolve in practice.
To address these systemic issues, Zhu proposed several strategies: promoting institutional innovation to strengthen incentives for financial investment, improving the motivation of both financial institutions and SMEs; developing diverse direct financing options; and innovating business models to better distribute risks and enhance the role of guarantee and re-guarantee institutions in SME financing.
Earlier, sources close to the Bank of China mentioned that in 2013, the bank planned to shift its focus toward small and medium-sized enterprises. While the exact credit policy was still being studied, the idea of prioritizing “small and micro†businesses remained central.
Some analysts have pointed out that supporting small and micro enterprises is a global challenge. With weaker data and greater risk management difficulties, expanding this type of lending can be risky, especially during economic downturns. In the current climate, shifting focus to SMEs represents a long-term strategic move for state-owned banks, though it has sparked debate. For example, one leading bank saw a sharp rise in default rates for small enterprise loans last year, prompting it to tighten credit controls and improve loan management.
In the "2012 China Industrial Economic Operation Report," released on December 28, 2012, MIIT called for improved conditions for SME development, aiming to boost their vitality and self-driven growth. The report suggested relaxing entry barriers for financial institutions, implementing policies to allow private capital to establish village banks and joint-stock financial institutions, and encouraging the expansion of direct financing markets to create a better environment for the real economy and SMEs.
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