Banking: At the Mercy Of Loan Sharks

Small businesses are crucial to the future of China's economy. So why don't entrepreneurs have access to bank credit?

Mao Jiatai's disposable cups ought to runneth over. In 2002, says the entrepreneur from western China's Sichuan province, his private company made and sold $2.5 million worth of paper containers for food and beverages. He has four production lines making paper cups in hangar-like buildings, and 20 young women from the countryside toil in the yard beside them, pasting labels for White Family Potato Noodles onto single-serving bowls. Business has never been better. Yet Mao, like so many other owners of private companies in China, can't get funding to take his firm to a higher level.

Last year Mao wanted to...

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