“Economist: Credit To SMEs Key To Solid Recovery”
In the July 7, 2009 issue of China Daily, Booz & Company CEO Shumeet Banerji said that ensuring credit and lending to China’s small- and medium-sized enterprises (SMEs) will be essential to a robust economic recovery. In advising SMEs to carefully conserve cash to keep going, Banerji also urged that governments lend more support to cash-starved SMEs. “The government should pay close attention to SMEs at any time, especially in difficult times like these,” he said. The Chinese government’s pro-active intervention, however, is a key advantage over other major economies, he added. According to Banerji, loans from banks are the primary source for the operations of China’s SMEs, but the volatile economic environment makes banks ever more reluctant to lend to SMEs as credit risks increase significantly. “Although the current financial crisis is slowing down, credit and lending are still very tight,” he said, which makes financing more difficult for SMEs.