Banking on SMEs as Chinese economy slows
China’s decelerating economy has compelled Beijing to launch a series of initiatives to stimulate SME growth. But more must be done. May 29, 2012 | Baron LaudermilkMay 2012 has been a month to remember for Chinese consumers and bankers. In the last week, Beijing has made it clear that the country’s economy has significantly slowed down due to the implementation of stringent monetary policies, and most importantly, because of a lack of financing to small and medium-sized enterprises (SMEs). On May 26th, China Securities Regulatory Commission (CSRC) announced that it would support initial public offerings and the refinancing of private companies; a step that many did not think would come for years. This announcement comes at a time when the state sector is flagging and has been under fire for being granted special financial and legal advantages. State-owned Assets Supervision and Administration Commission (SASAC), the country’s government-owned assets regulator, surprisingly supported this announcement, saying that the new policy would encourage more private investment in state-owned companies, which in turn would restructure, and perhaps improve them. CSRC had also specifically pointed out that it would support private money to boost mergers and acquisitions. But most importantly, this announcement perhaps open these historically closed Chinese institutions to new ideas, which will hopefully spawn innovation and efficiency. Wen Jiabao, Premier of China, has said that China’s economy is “unsustainable, uncoordinated, unbalanced, and unstable,” and that the status quo must change. In an interview on China National Radio, Wen commented that China’s four main banks are too big to lend, and that they are a monopoly that must be broken down to make the playing field fairer. Wen even criticized the banking industry numerous times, saying that private businesses' and large banks need to loosen their grip on lending needs to enable capital to flow more freely. SMEs, not state-owned companies, the driver for China’s economy According to Professor Yijiang Wang, SMEs are ... Please login to read the complete article. If you already have an account, you can login now or subscribe/register.
Categories: Capital & Strategic Issues, China, Risk and RegulationCapital & Strategic Issues,China,Risk and Regulation, Capital & Strategic Issues,China,Risk and Regulation, Keywords:SME, Wen Jiabao, Beijing, CSRC, SASAC, GDP, Credit Risk SME, Wen Jiabao, Beijing, CSRC, SASAC, GDP, Credit Risk
|