Experts: 'Biased mindset' needs change

The Boao Forum provides a platform for participants from around the world to exchange their economic insights. Huang Yiming / China Daily

Dong said China's banking industry faces unprecedented pressure in the face of accelerating interest rates, challenges posed by Internet finance and increasing financial disintermediation.

Identifying new customers has become the focus for the transformation of each bank so the community of almost 5 million MSEs is receiving increasing attention from the banking sector, he said.

During the past three years, the central government launched several policies to encourage the growth of MSEs, which alleviated the financial difficulties to a certain extent.

In August 2013, the General Office of the State Council emphasized the need to increase policy support initiatives for MSE finance.

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Suggestions included supportive fiscal policies, expanding banks' autonomous write-off rights and applying differentiated regulation in areas such as business access, asset risk weighting and loan to deposit ratio assessment.

With government support various financial institutions launched products and services catering to MSEs.

Loans by financial institutions in the banking industry to MSEs increased by 2 trillion yuan in 2013, accounting for 22.5 percent of all new loans and becoming a major business growth point for the banking sector, said Dong of China Minsheng Bank.

The National People's Congress is working on the revision of the current law on the promotion of small and medium-sized enterprises. A key question of the revision is how to reflect financial support to MSEs, said Zhu Hongren, chief engineer of the Ministry of Industry and Information Technology.

To solve the financing difficulties of MSEs, Chen Zhiwu, professor of finance at the School of Management at Yale University, suggested that the government issue more bank licenses to set up private banks.

"The financial demands of micro and small enterprises will not be met unless China has thousands of private banks and private financial institutions," Chen said.