The upcoming China Small and Medium Enterprises (SME) Fair will provide a new platform for SMEs to widen financing channels.

The expo, the first of its kind in China, will be held in Guangzhou, the capital of South China's Guangdong Province, from October 18 to 22. It will attract delegations from the Chinese mainland, Hong Kong and Macao.

Officials from banks, brokerages and exchanges will be invited to a specialized financing meeting during the fair to hold direct talks with SMEs on financing issues.

"One of our targets is to bridge the two sides and to help SMEs, which made up over 55.6 per cent of GDP in 2003, overcome their financing difficulties," said You Ningfeng, vice-governor of Guangdong Province.

Besides, he revealed that the central and local governments will also increase the number of guarantee companies as well as re-guarantee companies to enable more SMEs to get loans from banks.

"We also have an eye on improving enterprises' knowledge about financing, so the expo will invite experts to give lectures to the firms," You said.

Statistics from the National Development and Reform Commission indicate SMEs comprise 99 per cent of Chinese enterprises, and absorb 75 per cent of China's labour force, but confined by their size, capability, and mode of operation, they often encounter financing problems.

Some State-owned banks are reluctant to provide loans to SMEs, worried about high risks while earlier reports said that 32 per cent of SMEs were unsatisfied with their financing situation in the second quarter of this year.

Aware of this obstacle, the Chinese Government has already taken some measures to help small and medium firms seek capital.

Authorities set up development funds for them and encourage SMEs to list on the stock market.