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II. Main Measures Adopted by Local Governments to Promote Development of the NES
As the NES is playing an increasingly important role in economic growth and system reform， local governments have strengthened their support to the NES over the past few years. In particular， they have formulated certain policies to solve financing difficulty of NSEs. Such supportive policies mainly cover three aspects.
II.1 Establishing Guaranty Agencies
To support the development of small and medium-sized enterprises (SMEs)， under the enthusiastic advocation of relevant departments of the Central Government， local governments at all levels are focusing their effort on setting up credit guarantee agencies for small and medium-sized enterprises. Such guarantee agencies are regarded as a breakthrough point for solving the problem of financing difficulty. For example， except in specific cities， all the 13 cities under the direct jurisdiction of Jiangsu Province have set up credit guarantee agencies for SMEs. There are 14 such agencies in the whole province， holding a total value of RMB 400 million in registered capital. In 2000， they issued letters of guarantee to over 200 enterprises， with an accumulative number of over 1800 and a total value of RMB 2.5 billion. Based on incomplete statistics， by September 2000， over 50 guarantee agencies were set up in the cities， counties (districts) and townships in Zhejiang Province. They owned a total value of RMB 218 million in registered capital and issued over 1490 guarantees with a total value of RMB 771 million in favor of over 1，000 enterprises. At present， Jiangsu， Zhejiang and Shandong Provinces are actively engaged in preparation to establish provincial guarantee agencies. Shanghai Municipality has adjusted its public finance budgeting system and established credit guarantee agencies for SMEs supported mainly by the municipal treasury with the balance shared by all levels of public finance. By the end of 2000， this guarantee system has issued guarantee for 1，833 projects with a total value of RMB2.28 billion.
II.2 Improving Financing Environment for NSEs
Over the past few years， in order to improve the financing environment for NSEs， effort has been made by the governments of the four regions in the following aspects:
First， strengthening contact and cooperation with banks. In order to support the development of privately-owned SMEs， relevant provincial and municipal departments of Jiangsu and Zhejiang have signed lending co-operation agreements with the Agricultural Bank of China， the Industrial and Commercial Bank of China and Minsheng Banking Corporation， on financing issues of SEBs. They have also maintained frequent contact with the banks to exchange views and analyse market changes and operational status of typical enterprises， and co-ordinated with the banks in their field studies on NSEs.
Second， solving actual problems for small and medium-sized NSEs in the course of getting loans. For example， the provincial government of Zhejiang Province has issued several specific policies to help such enterprises solve the problems of multiple registration， multiple charges and repeated assessment for real estate mortgage in the borrowing process. The Government of Hangzhou City specified policies for NSEs to acquire public land assets， which has improved the financing environment for numerous township enterprises after their system reform.
Third， establishing special agencies to provide services to SMEs. In order to support these enterprises in an active way， the Shanghai municipal government has established a financial accounting management centre and a SME service centre to provide them with information， consultancy and management services. Meanwhile， in order to fundamentally relieve financing stress from SMEs and put the market in order， the Shanghai municipal government plans to establish a standard credit rating agency and a credit system for small and medium-sized enterprise within 3-5 years.
II.3 Setting up Venture Investment Fund
In order to promote the development of small and medium-sized science and technology enterprises， many local governments have set up venture investment funds and venture investment companies. For example， Jiangsu Province has established a venture investment company with provincial government finance and started market trial operation， and major cities of the province also followed suit. The government of Zhejiang Province supported the establishment of three venture investment companies and some of its city governments also set up renovation funds for SMEs. In Shanghai， the municipal government has built up a venture investment system， which includes certain specialised agencies such as Shanghai Chuangye Investment Company， Shanghai Science and Technology Investment Company， Shanghai Lianchuang Investment Management Company and Shanghai Technology Property Right Exchange. By the beginning of 2001， the total value of venture investment funds raised by Shanghai Municipality exceeded RMB 5 billion， while more than 40 various venture investment and management companies came into being.
III. Financing Status and Problems of the Private Economy
In general， with efforts made by all areas concerned， financing difficulty encountered by NSEs has been relieved to some extent. However， the problem has not been solved fundamentally. Based on statistics of Shanghai (Trade and Development) Service Centre for Small Enterprises， after a year of its establishment， 80% of its clients demanded financial assistance. In Jiangsu Province， the proportion of the outstanding balance of loans to SPEs in 1999 only took up 4.8% of the total. Although there was a small increase in 2000， it only reached 5.2%. In Zhejiang Province， the proportion of total lending by all commercial banks to township and privately-owned enterprises only took 6.5% of the total in 2000. The proportion of lending by urban commercial banks was slightly higher at 8.2%. In Wuxi City of Jiangsu Province， there were 6700 new POEs in 2000 with a total registered capital of RMB5.024 billion. However， new credit funds for them was only RMB54 million. There were 20 POEs with excellent performance that took part in the bank-enterprise co-operation project， but only three of them obtained loans， totalling RMB7 million. Obviously， this situation is tremendously out of line with the status of NES in the two provinces of Jiangsu and Zhejiang.
III.1 Banks Generally Compete for Large Enterprises and Reluct to give loans to Small Ones.
Although the credit policy of the Central Bank encourages commercial banks to increase lending to SMEs， for safety considerations， however， all commercial banks compete for large clients and reluct to lend to small borrowers. This has created a situation where more than sufficient funds are made available to the large enterprises， whereas the small ones are unable to have financial support enough to get out of the corner. The consequence is capital abundance of both banks and large enterprises， resulting in significant increase in enterprise savings and loans flowing to consumption and stock market. Take Wuxi city for example， enterprise savings last year increased by about 17%， representing 52.5% of increased savings. Meanwhile， short-term lending by banks for housing and consumption increased by 38.3%， making up 51.9% of the total increase. In contrast， lending to industries only increased by 6.1%， remarkably lower than the 14.4% growth rate of industrial output. In addition， bill acceptance business has developed rapidly over the past few years， but it has also focused on the large enterprises， the banks hardly give any bill acceptance quota to the small ones.
III.2 Discrimination against Private Ownership System Still Remains in Various Degree.
Except in Zhejiang Province where the NES is universally accepted for the sake of its particular historical and cultural background， we found in those places of our study various degrees of discrimination against SEBs. With the long-term influence of the planned economy and traditional ideology， financial departments generally tend to "be afraid of" private ownership. Some localities reported that， for the same amount of a bank loan， if it was defaulted by a SOE， the bank staff may be free from any responsibility， but if it was defaulted by a POE， the bank staff may be investigated for responsibilities by the judicial organ. For the fear of the lending responsibility， the credit personnel acted very prudently in specific operations， which is featured in restrained loans， complicated procedures， harsh mortgage terms， overly strict requirements on mortgages and extremely low mortgage rate. Some POEs said that they usually had to spend a half year’s time obtaining a loan， thus having missed lots of business opportunities. With RMB550 million of its own capital and RMB1 billion of annual sales， Zhongda Industrial Group in Jiangsu Province was awarded the title of Excellent Enterprise by the Agricultural Bank of China Head Office and was granted a loan quota of RMB50 million. In practice， however， the business department of the Agricultural Bank of China only allowed a loan of RMB30 million to Zhongda Group.
III.3 Guarantee Companies and Various Funds Are Utterly Inadequate.
At present， there are over 340，000 SEBs in Shanghai. In the past two years， however， only over 2000 enterprises (including state-owned and shareholding enterprises) received financial services from the Shanghai Branch of China Investment Guarantee Company， the Technology Exchange， the venture investment companies and all kinds of district-and county-level guarantee funds. By the beginning of 2000， the proportion of financing loans obtained in all forms of guarantee only made up around 5% in Shanghai， of which loans to small enterprises merely took up 30%. In other words， loans obtained by small enterprises through the guarantee channel only accounted for 1.5%. In Zhejiang Province， despite a large number of guarantee agencies， most of them only have a registered capital ranging from RMB 3 to 5 million. Take the total registered capital as RMB 218 million and multiply it by five， it could only produce a guarantee capacity of RMB 1 billion， merely 1.1% of new loans in 2000 in the province. In Wuxi City， Jiangsu Province， the registered capital of the 30，000 POEs was RMB 17.8 billion. If matched on a 1:1 basis， the working capital shortage would aggregate RMB 12 billion. However， the aggregate capacity of the guarantee agencies in the province was less than RMB 1.5 billion. Moreover， as generally reported by all localities， the guarantee funds are operating on thin ice because they cannot prevent risks for themselves. They have to meet too strict qualification appraisal and counter-guarantee requirements， and go through very complicated procedures， which not only add burden to enterprises but also let slip business opportunities.
III.4 Maturity Schedule of B
Research Report on the Current Financing Situation[全文结束]