“Credit conditions for SMEs turned less favourable in August as financing costs continued to rise and bank loans became more difficult to obtain,” said a research note from Standard Chartered economists, led by Lan Shen.Efforts to increase credit access and lower costs have failed, and the latest stimulus efforts have focused on funneling cash into large SOEs for land buys which can then finance local government infrastructure spending.
“Medium-sized companies enjoy better credit conditions than smaller ones,” Lan added.
...Because of the difficulty of raising capital from banks, SMEs have tended to look towards the unofficial banking sector – or shadow banks – for their funding needs. In many cases, this resulted in higher borrowing costs.
In addition, this year, policymakers have launched a number of crackdowns on the shadow banking sector, with the aim of reducing the risk in the system following the collapse of peer-to-peer (P2P) lender Ezubao.
2014: Li Keqiang Blasts the Banks for Not Lending to Small Business
2015: Li Keqiang Losing War on Financing Costs; 70% of SMEs Have Seen Financing Costs Rise in 2015
2016: Rumor: Li Sidelined, Xi Takes Over Economic Policy