Credit information matters for small and medium enterprise financing. A recent State Council executive meeting decided to implement classified management of enterprise credit risk, pushing regulation toward fairer and more effective practice. That is good news for the national financing credit service platform: stronger credit information sharing can ease the information asymmetry between banks and small businesses – a ‘golden information bridge’ for SME lending.
Support measures have delivered results. By end-November 2021, banking institutions had extended about RMB 18.73 trillion in inclusive small and micro business loans, up 24.1% year on year, and platforms at all levels had cumulatively disbursed over RMB 7 trillion in loans. The ‘credit-easy-loan’ model promoted by the National Development and Reform Commission, the banking regulator and others has played an important role.
Gaps remain: some departments’ and industries’ data is hard to obtain, and information costs run high. Against mounting economic downward pressure, stronger financial support for small businesses and individual businesses matters for keeping the economic environment steady.
The implementation plan for strengthening credit information sharing to support SME financing aims to build a long-term mechanism against financing difficulty and high costs: deepen credit data development, refine SME credit evaluation indicators for precise profiling, monitor borrowers’ credit dynamically to improve risk warning and response, and apply joint penalties to malicious debt evasion as determined by law. Together with risk-based classification, the goal is a market where honest operators are undisturbed and violators find nowhere to hide.
Credit is the foundation of a market economy. Local authorities and departments should keep speeding up credit information sharing, deepen data development, innovate financing models, and protect information security and market players’ rights – so banks can serve small businesses better, loan availability keeps rising, financing costs fall, risks are contained, and small businesses can work through difficulties while the economy stays on an even keel.
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