For the reason that financing has turned out to be the major worry for SMEs in China and accordingly the issue has come out as a burning policy issue for the government in the country, this study aims to look critically into the financing situation of SMEs in China. In order to achieve the aim, following objectives are developed for the study:
• To study the structure and access of financing SMES in China
• To identify and assess the challenges of financing SMEs in China
• To study the role of foreign banks in financing SMEs in China
• To assess policy reforms impact on controlling the of financing SMEs in China
Whilst studying the lending and the changing structure of the banking industry, Strahan and Weston (1998) find that SMEs get reduced of financing in the case large size banks forms merger or acquisition , whereas in the case forming merger or acquisition by small scale banks financing increases for the SMEs. They throw light on an occurrence which concerns to the fact that during the establishment of small scale banks merge diversification improved anti-risk capability of the banks subsequent to the merged and in this way they may well offer more financing to SMEs. However, with the added opening out of the banks’ size, they lean to financing to large size firms, consequently, the proportion of financing to SMEs tend to come down. On the other hand, authors have revealed based the findings of their study that big establishments are found to finance to bigger, grown-up SMEs with strapping financial proportions, and small establishments are revealed to be reliant more on soft information and financing to SMEs with which they have strapping associations relationships (Bergen et al, 2005). Given that SMEs play an ever more vital role, authors increasingly have started to examine financing to SMEs in the contexts of both developed and developing countries.