China has attained an extraordinary economic development, and the country’s economic growth rate has already improved on that of France and is all set to go beyond Japan almost immediately. Moreover, it is forecasted that this growth will even catch up to the US in coming years. Behind this, however, banks’ bad loan problems have been deepening and a stock market slump has become apparent lately. SME sector plays a decisive role in the growth of Chinese economy contributing 35 percent , but the growth of the economy may be blocked if financing and credit system for the SME sector is not made smooth, given the fact that SMEs access to financing accounted for just 6 percent of the total. The fundamental problem is that there are flaws both in the SMEs management and financial system. Therefore, this study explores and analyse the problems which SMEs in China are faced with in terms of financing, particularly in relation to loans from banks.
1.1 Aim and Objectives of the Study
This study aims to explore and analyze the problem of financing SMEs in China by local commercial banks and foreign banks’ role in financing SMEs in the country. The study aims to achieve following objectives:
• To explore and analyse the structure and access of financing SMEs in China
• To explore and analyse the problems of financing SMEs in China