Friday, December 16, 2011

China SMEs face more credit troubles - report

(Dec 16): Cash-strapped small and medium-sized enterprises (SMEs) in an eastern Chinese city are struggling to survive in the face of financing restrictions, the state Xinhua News Agency reported, citing a Bureau of Statistics survey.

More than half of 192 enterprises surveyed in Hefei, in the eastern province of Anhui, are reeling from high loan interest rates and difficulty borrowing, in addition to rising costs, the report said.

Of 132 SMEs that applied for 3.49 billion yuan of credit($547.58 million), only 2.693 billion yuan ($422.53 million) were awarded loans, the survey said.

SMEs, which make up the bulk of China's economic engine, have also been hit by the credit crunch in the eastern city of Wenzhou, where the heads of at least 80 companies have gone into hiding after defaulting on loans.

The credit crunch is spreading among small companies that generate about 75 percent of China's jobs a year after Beijing kicked off a monetary tightening campaign to fight inflation that is fanning fears of a hard landing in the world's second-largest economy.

Small companies say they urgently need official credit as many have been forced into the informal loan market, where annual rates of interest can exceed 100 percent -- more than 15 times China's benchmark lending rate. - Reuters

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