The Construction of Chinese Small and Medium-Sized Enterprises' Credit Guarantee System

In the development of Small and Medium Sized Enterprises (SMEs), China has met with a variety of difficulties and problems. An acute lack of financing is one of the most difficult ones to deal with. Another biggest obstacle to overcome is to get credit guarantee. The only way to solve it is to establish a complete and wellexecuted SMEs'credit guarantee system.. The purpose of credit guarantee is to set up a mechanism and ensure the payment of debts to creditors based upon the debtor's own funds. And the goals of establishing a guarantee system is: To promote the expansion of policyoriented industry;provide a wideranging means of financing,reducing credit risk of commercial banks;improve the financial environment for SMEs; and accelerate the stable and steady growth. The fundamental ideas of establishing credit guarantee system may have adopted from foreign models,but they should be adapted themselves to the local environment. In the following are the suggestions we will discuss in the paper:Government funds should be executed in the open market with a view to offering assistance and maintaining stability;and the credit guarantee system should be used as a form of leverage to promote the establishment of social credit in the long run. The basic structures of the credit guarantee system include:Operating mechanism and organizational model;source and use of guarantee funds;management institution;crisis management;and supervisory institution.