by Amira Berrada - South Asia, East Asia and Pacific -

MICROCAPITAL BRIEF: Loans to Small- and Medium- Sized Enterprises in China Increasing, but Demand Still Significantly Exceeds Supply

An estimate attributed to China’s Ministry of Industry and Information Technology indicates that 15 percent of small and medium-sized enterprises (SMEs) in China are able to secure loans from banks. However, SMEs often pay interest rates of between 20 and 50 percent more than is charged to large enterprises. The number of SMEs reportedly increased sevenfold between 2008 and 2011. The firms may be funded by shareholders, bank loans and donations. Of loans made by Chinese microcredit lenders, 70 percent have terms between three and six months with about 30 percent having terms of one year or longer. Loans are typically in amounts less than RMB 2 million (USD 317,000).

Because demand for loans significantly exceeds supply, the government has launched an initiative to promote an increase in the quantity of microcredit lenders. Details on the effort remain few.

By Natalie Baer, Research Associate

Sources and Additional Resources:

[1] Can Microcredit Lenders Fill the Gap? http://www.piie.com/blogs/china/?p=1160

MicroCapital story, March 6, 2012, “MICROCAPITAL BRIEF: China Association of Microfinance (CAM), China International Center for Economic and Technical Exchanges, Peking University, CreditEase Microcredit Investment Launch Inclusive Finance Wholesale Fund,” https://www.microcapital.org/microcapital-brief-china-association-of-micr…

MicroCapital story, March 6, 2012, “MICROCAPITAL BRIEF: People’s Bank of China, PlaNet Finance Research Project Aims to Upgrade Microfinance Risk Management” https://www.microcapital.org/microcapital-brief-peoples-bank-of-china-pla…

MicroCapital story, February 22, 2012, “MICROCAPITAL BRIEF: Number of Microfinance Institutions in China Hits 4,282,” https://www.microcapital.org/microcapital-brief-number-of-microfinance-in…

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Amira joined MicroCapital while working at Export Development Canada (EDC) as a Credit Insurance Underwriter. Amira holds a Bachelor degree in International Business and Finance from Concordia University in Montreal. While completing her bachelor degree, Amira spent a semester in France and upon graduation, three months in India working with non-governmental agencies, political and spiritual groups for various socioeconomic initiatives such as the advancement of women. While travelling to different cities and rural areas in India, Amira was touched by the poverty she witnessed and was dedicated to finding a way to intertwine her business interests with her passion for development. She hopes this internship in microfinance will provide the framework to integrate an element of development into her professional career as well as positively contribute to the field of microfinance. Amira speaks English, French, and Spanish fluently and has conversational knowledge in Portuguese and Arabic. In her spare time, she enjoys reading, trying new restaurants such as molecular gastronomy, restaurants made out of ice and Nicaraguan meals wrapped in banana leaves. Most of all, she loves to travel with loved ones.