Research On The SMEs’ Financing Guarantee System Of China

China’s features of rich labor force but lack of capital, determines the special significance that it is very important to develop SMEs in a labor-intensive industries. But due to the weak base of the SME themselves and the special ’discriminatory’ system limits, the difficulty of financing is the ’bottleneck’ problem that restrict its development. SMEs are in the early stages of development, although the uncertainty of the future development was decline, the product profit and the transparency of information will continue to improve, the level of development still cannot meet the requirements for the issuance of bonds and stock financing. In a certain period of development, SMEs cannot meet their requirements. Therefore, SMEs basically missed the bond financing and stock financing. When folk borrowing and own accumulation fund sources can not meet the needs of the development of SMEs, bank lending will appear more important.The theorists and practitioners agree that the bank lending in China is the most important external source of SMEs’ financing and also the initial conditions to solve the financing problems of SMEs. However, because of the special economic system in China and weaknesses of SMEs, banks have ’credit rationing’ for SMEs in order to protect their own interests. And this discriminatory system will not change in a short term. Therefore, to make up the lack of credit for SMEs in order to improve their availability of credit facilities is a logical and practical idea to solve the financing problem of SMEs. In order to support the development of SMEs, the establishment of SMEs’financing guarantee system is commonly used worldly. It is also proved as an effective way to expand the bank credit business.This paper starts from the logical point of the financing for SMEs, which explains the meaning of SMEs’ financing guarantees being chosen for the research purpose. Since credit guarantee agencies being involved in the credit markets chain, funds between banks and enterprises will help to ease the supply and demand imbalance. Since the reform and open policy, SMEs are rapidly developed driven by the interests of the property rights system. SMEs in the national economy important position and the financing restriction problem for SMEs are increasingly concerned by the theorists and practitioners. Based on the demand of credit guarantee for private economy, the practice of credit guarantee started from 1992 in China. Since then, the private enterprise in ChongQing and ShangHai spontaneously formed the guarantee institutions. However, the establishment of those institutions were affected initially by the thought of planned economy and deeply branded with the imprint of government intervention. With the commercialization of state-owned banks in China deepening reformed, the market demand for credit guarantee increased. Due to the market demand and the direct promotion of government policy, the financing guarantee for SMEs rapidly developed and formed a national multi-level guarantee system.Through almost twenty years exploration and development, the credit guarantee system will go into a stage, which aims at giving the further perfect regime; and establishing national credit re-guarantee system and socialized credit system. By the end of 2009, there are 5547 variant sizes of credit guarantee institutions which financed 3389 billion RMB. With the increasing significance of financial guarantee to credits area even the whole field, we are facing a problem that how to establish financial guarantee system, which can enable the guarantee agencies to be managed stably, and the guarantee industry is developing sustain ably. The research on this issue has important theoretical and practical significance. With history as a mirror, this paper firstly summarized the domestic and overseas scholars about guarantee research results, and combed the development pulse of SMEs, so as to provide theoretical basis and experience for the reference study. Secondly, the paper exhaustively analyzed the structure of guarantee system. Refer to the framework "four-in-one" credit guarantee system, the paper discussed how to make measures choice that improve all the factors contributing to the structure of guarantee system. Finally, base on the index of evaluating the performance of guarantee institutions, this paper built a mathematics model to provide insights of the sustainable development of guarantee institutions. This essay expressed the views of meeting requirements of maximum profits base on the trade-off between risk and payoff.