In the People's Republic of China (China), SMEs play a key role in maintaining economic dynamism and boosting innovation and entrepreneurship. SMEs contribute approximately 50% of tax revenue, 60% of GDP, 70% of technological innovation, and 80% of urban employment. In 2024, there were about 60 million SMEs in China, and the number of newly registered enterprises reached an average of 24 000 per day.
Outstanding business loans for Micro and Small Enterprises (MSEs) increased to CNY 81.4 trillion in 2024, up 14.8% from 2023. The share of outstanding business loans for MSEs has been relatively stable for the past two years, at 51% in 2023 and 53.66% in 2024, respectively. Over 2022-23, the ratio of short-term loans to total loans for SMEs declined from 43.1% to 42.68%. This ratio dropped to 42.49%, down 0.19 percentage points in 2024.
In 2024, interest rates for SMEs and large firms were 4.18% and 3.78%, down 0.28 and 0.43 percentage points, respectively, compared to 2023. The interest rate spread between SMEs and large enterprises continued to increase, rising from 0.25% to 0.40% in 2023–24. This represents the fifth consecutive year of spread expansion since 2020. In recent years, China has improved and implemented the policy of cutting taxes and fees on debt finance. In 2024, SMEs were on average charged 1.27% of the total value of bank loans in the form of extra loan fees, which have decreased slightly by 0.28 percentage points with respect to the previous year. In 2024, the 1-year interest rate in the shadow banking sector ranged from 9.11% - 13.02%, with a spread of about 4.93% - 8.84% compared to formal bank loans.
In 2024, the rejection rate of SME loan applications was stable at around 4.71%, and the utilisation rate of SME bank loans has remained at a high rate of 85.95%. On average, 57.13% of SMEs tried to apply for a bank loan.
In 2024, newly listed SMEs obtained CNY 13.15 billion from the STAR Market, CNY 22.58 billion from the Shenzhen Venture Board, and CNY 5.02 billion from the Beijing Stock Exchange, down by 90.94%, 81.54%, and 67.47% respectively compared to the previous year. Venture capital, leasing and factoring, online lending and crowdfunding continue to remain important sources of SME financing.
In 2023, the ratio of non-performing loans to total MSE loans was 2.01%, down 0.14 percentage points from 2022. The bankruptcy rate for SMEs was 3.72% in 2024 according to survey data, up 4.79% from the previous year.
In September 2024, the national small and medium-sized enterprise development fund reached CNY 35.7 billion, and a total of 42 sub-funds were set up, covering more than 1,200 growth-oriented enterprises in the seed and start-up stages. In 2024, the annual re-guarantee business scale of the National Financing Guarantee Fund reached CNY 1.41 trillion, an increase of 7.6 % year-on-year. The central government has issued a special fund of CNY 3.059 billion for the development of small and medium-sized enterprises, focusing on supporting ' little giant ' enterprises to invest in scientific and technological innovation and industrial chain collaboration.
In 2024, the Chinese government has continued to alleviate financing difficulties and reduce costs for SMEs, including tax and fee reduction, subsidies, financing guarantees, expansion of financing channels, improving financial services, and enhancing the connection between industry and finance. At the same time, China will broaden multiple financing channels and consolidate the economic ' ballast stone ' status of small and medium-sized enterprises.