Credit-starved majority envy China's lucky 300
While the credit taps have been turned back on slightly for a small number of Chinese enterprises, the majority will remain under the tight grip of Beijing.
The central bank last month announced a list of 300 enterprises that will be given working capital loans in the second half of the year to help alleviate their short-term funding problems.
Enterprises have been battered by the shortage of funds since Beijing has moved to clamp down on a runaway economy in July 1993.
Expansion projects have been held up while accounts receivable have soared and triangular debt has mounted.
About half the country's enterprises are in the red.
The central bank said the 300 enterprises were selected for their good economic efficiency, low debt-to-equity ratios and good market potential for their products.
The amount of money available to the companies would be based on their forecasts of production and sales this year.
The enterprises combine to receive an equivalent of a third of the working capital loans quota of the commercial banks over the next six months.
As the bulk of the credit quota is being given to the 300 enterprises, those that are not on the list will probably be having even more difficult times than before.
These enterprises will see themselves operating under an even worse credit environment as hopes of a better credit environment disappear.
Critics say the discrimination in the granting of loans is a step backwards in the banking reform, which aims to turn banks into self-reliant entities instead of following directives.
Beijing announced it would prop up large and medium-sized state enterprises through a 10-point measure.
Working capital loans may help enterprises to relieve funding shortages in the short term, but to enterprises, the real prize is the relaxation of loans on fixed-asset investment.
Despite a better working capital position, the need for companies to carry out fixed-asset investment is equally important to enterprises.
Enterprises will only be able to pursue their development drive when loans on fixed-asset investment are relaxed.
Only by carrying out expansion plans will enterprises boost output and increase capacity.
Most of the enterprises have halted their expansion plans because credits taps have been tightly shut since the austerity programme was implemented in July 1993.
Industrial manufacturer Shanghai Chlor Alkali Chemical Co, for instance, has a huge demand for funds to feed its ambitious plans for the next five years.
This year alone, the company plans to invest 800 million yuan (about HK$743.76 million) to expand a polyvinyl chloride project with an annual output of 100,000 tonnes.
A further 300 million yuan will be put into upgrading a caustic soda project, with the same capacity - and more projects to come, when funding is secured.
China Textile Machinery will need more than 100 million yuan this year to finance the expansion of an assembly line for modern air-jet looms, using Japanese technology.
The lack of fixed-asset investment loans remains a key issue to enterprises.
Expansion in production is one thing, and expansion through diversification is another.
Only by doing this can mainland enterprises be able to fend off competition and to take on foreign rivals.
Relaxation of fixed-asset investment should be dealt with caution.
China's state sector is the backbone of the economy.
Any reckless increase in fixed-asset investment can easily result in rapid growth in aggregate demand - and thus inflation.
Chinese leaders will not want to see the kind of inflation that brought the economy to a halt to happen again.
The key remains the striking of a balance between giving out credit to enterprises and maintaining a reasonable check on inflation.