World Bank loans China $100 mil. to develop small businesses

BEIJING, June 20 Kyodo

The World Bank announced Wednesday the approval of a $100 million loan to China to help it develop small and medium-sized businesses.

The World Bank said privately owned smaller enterprises are helping to fuel China's economic growth, but their needs are being neglected by Chinese banks which often only lend money to larger companies.

The new loan is being given to the China Development Bank and other financial institutions to specifically lend to smaller firms.

''We hope the project will demonstrate to Chinese banks that lending to medium and small enterprises can be commercially sustainable,'' said David Dollar, the World Bank's director in China.

The move follows a government announcement Tuesday that bureaucratic red tape has been slashed to make it easier for people to set up a business.

The state-run Xinhua News Agency quoted an unnamed, senior central government official involved in the reforms as saying that lack of transparency and poor supervision of the system had led to many cases of corruption.

The official quoted an example of a farmer in southern China who took two years to obtain the 270 approvals he needed to set up a chicken farm. By the time he completed the process he realized his business was not commercially viable, Xinhua reported.

The official also said one city in Henan had even set up an office solely to oversee the registration of people wanting to make and sell steamed bread.

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