Andrew Collier and Sara Hsu say a study of loans to China's SMEs shows their considerable reliance on the shadow banking system, raising their risk exposure to any liquidity crunch.
What will happen to small business as China's economy slows? The country's small and medium-sized enterprises are an important part of the economy and even more integral to employment; they account for 60 per cent of gross domestic product but a full 82 per cent of employment. With China's GDP growth dropping from over 10 per cent three years ago to 7.5 per cent or below, SMEs are going to struggle, which could have a disastrous effect on China's future.
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