A Study On Government Financial Supporting Policies Of Smes

Since the late nineties of the 20th century, the national economy has become more market-oriented. SMEs (small and medium-sized enterprises) in China thus are playing an increasingly important role, with the changes in domestic and foreign trade environments. The paper first states the financing difficulties of SMEs and its important role in the development of the socialist market economy. The paper tends to solve the problem of how to establish and improve the financial supporting system of China's SMEs by further analyzing the criteria for the classification of SMEs, development characteristics and the current difficulties. The paper also compares the domestic and international financial supporting policies for SMEs, especially those in the United States and Japan.The development of SMEs in China is limited, mainly due to the poor financial supporting policies. Besides, the related laws, management system, social service system and the enterprises themselves remain to be perfected. The current problems in financing are poor supporting policies, the single way of financing, the insufficient loan supplies and distortions in debt term and structure. The paper argues the Government should first improve the policies and regulations for SMEs by establishing an external business-friendly environment, opening up a variety of financing sources and establishing a sound credit guarantee system for SMEs to strengthen the financial services. Besides, SMEs should also continuously enhance their own strength by establishing a good credit image and a good relationship with the bank and they should improve the internal financial system and strengthen their self-construction. China's financial system remains primarily under the guidance of the government, state-owned large banks dominating and medium and small financial institutions underdeveloped. There are no specialized financing services for SMEs. In the long run, this is the very issue that should be solved to promote the development of SMEs.The paper is divided into five chapters. The first chapter is about literature review. The financing supporting theories are discussed in the second chapter about the current situation of SMEs in China and the problems they are facing. The third chapter analyzes the problems in SMEs development and the current financial supporting policies. In the fourth chapter, different supporting policies for SMEs both at home and abroad are analyzed and compared. The last chapter put forwards the general principles and some specific measures to better financial supporting polices of SMEs in China.