Boao Forum to address SME financing

Small and medium-sized enterprises are critical to China's economic growth. They contribute around 60 percent of the country's GDP, and provide more than 80 percent of jobs.

But the financing support they get -- about 20 percent of bank loans -- is in stark contrast to their economic role. In this year's Boao forum, one of the sessions that stands out is the discussion on SME financing.

One of the highlights of the Boao Forum was the issuing of the report for SME financing.

In economic downturn, SME are the most vulnerable most exposed, as Chinese economy set to slow down in the past two years, SMEs took a big hit. Many lost, some had to shut down, a lot them had trouble refinancing,

The key is to provide Chinese SMEs multiple channels of financing, to meet both short-term working capital needs and long term fixed investment need.

Fred Hu says the government could use fiscal policies to provide credit guarantee to help SMEs get funding.

Besides direct financing, developing the bond market can also help SME financing.

China has made important progress such as establishing a number of small credit institutions in the past few years. But analysts say for the SME financing situation to improve substantially, a lot more need to be done. But some remain hopeful; they believe that in a few years time the issue will be very much mitigated.