Small and medium-sized enterprises in China, especially those engaged in science and technology, are mostly choked by acute shortage of fund, a political advisor has warned.

"It has a direct bearing on the national strategy of innovation, as 66 percent of patents, 74 percent of technological innovations and 82 percent of new products in China come from small and medium-sized enterprises," said Zhang Huaben, a member of the National Committee of the Chinese People's Political Consultative Conference (CPPCC).

"However, the most prominent problem Chinese small and medium-sized companies have come across is the difficulty in financing," said Zhang.

Zhang suggested policies should be mapped out to loose the criteria for small and medium-sized companies to go listing and to step up the building of a property right market.

The government should encourage venture capital to be involved in the merger and acquisition of small and medium-sized enterprises through preferential tax and loan policies, he said.

"It will be a good try to set up science and technology banks in high-tech zones to grant loans mainly to well-developed high-tech enterprises," he said.

A credit system should also be established for small and medium-sized companies.

Lin Yifu, a renowned economist and CPPCC member, also pointed out that large banks are more inclined to offer loans to large enterprises and big projects, which have hampered the development of small and medium-sized enterprises.

He called on the government to give support to domestic small and medium-sized banks, saying that regional small and medium-sized banks will be the most effective institutional arrangement to provide financial services for small and medium-sized enterprises.

(Xinhua News Agency March 11, 2007)