Under the government's current stringent monetary policy, it has become harder for SMEs to obtain loans. Central bank figures show that short-term loans account for 39 percent of all loans at present, down from 44 percent last year. Guangzhou Daily quoted an official from the National Development and Reform Commission, the country's top economic planner, as saying that more than 67,000 SMEs shut their doors in the first half of this year because of financing problems.

Currently, about 43 million SMEs make up 99 percent of all Chinese enterprises, and their aggregate output value accounts for 60 percent of the country's overall output value, Qin Zhihui, a senior official from the National Development and Reform Commission, told the Investor Journal. These enterprises account for 57 percent of national revenue and also pay 50 percent of the country's tax. Most importantly, SMEs provide about 80 percent of jobs in urban areas, he said.

"SMEs play a significant role in boosting employment and economic growth," Qin said. "If they were closed down on a large scale, the economy would have gone wrong."

Guo Tianyong, a banking professor at the Central University of Finance and Economics in Beijing, said the central bank issued the credit readjustment policy specifically to provide more financing for SMEs.

Cooperation is key

The central bank decree sent positive signals to the market, but lenders responded with little enthusiasm.

"The newly added loan quota has little impact," Dong Yihang, a credit department employee at the Bank of China, told Beijing Review. "The deposit and loan ratio should not exceed 75 percent. Plus with the deposit growth slowdown, many banks have not used up their quota set early this year."

Foreign banks such as Standard Chartered of Britain said although the central bank raised the credit quota, it had no intention of applying for the new quotas. It still had quite a few quotas left from the first half of this year and did not need the extra ones.

"Banks follow strict risk control in granting loans to SMEs," Dong said. But despite the government's consideration of the difficulties of SMEs, the majority of them still would not be able to obtain loans, because banks usually issue loans only to profitable ones, he added.

Guo said although the central bank made it clear that the newly added loans must be issued to enterprises in certain sectors, the banking watchdog should take full responsibility for checking the commercial banks and preventing loan abuse.