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