A top banker said more financial support will be given to western China to spur key economic sectors in the region.

Additional loans granted to the region are expected to bolster industries such as hydraulic power, natural gas and electrical generation, which can help provide low cost energy, reduce pollution and help economic output, said Wu Xiaoling, deputy governor of the People's Bank of China.

"We are convinced that loan growth and favorable policies will help the region solve its financing difficulties," she said during an address to the Western Forum of China.

But favorable policies for western enterprises do not mean banks must provide them low interest rates, Wu said, noting that market-oriented approaches should be taken as financial reforms deepen.

Instead, banks should set interest rates through normal risk-estimating mechanisms, while government can offer fiscal allowances to those enterprises that are engaged in high-risk but profitable sectors.

Wu said western China has acquired considerable support from the central government since the "Go West" campaign was launched in 1999.

According to People's Bank of China, western regions have obtained loans totaling 2.86 trillion yuan (US$344.6 billion) through the end of September.

The balance of long- and medium-term loans in western China stood at 1.4 trillion yuan (US$168.7 billion), accounting for 19.3 percent of the country's total.

Yao Zhongmin, China Development Bank's deputy president, echoed Wu by saying the bank will further increase loans to projects in infrastructure and natural resources exploitation.

Meanwhile more private funds will come to the west as project bonds are encouraged in public projects and energy industries.

"Some infrastructure proposals will be chosen as pilot projects to attract more investment," Wu said.

However some enterprises, particularly small and medium-sized enterprises in these regions, still encounter difficulties in receiving loans from local banks.

Zhong Dingxu, general manager of Sichuan's Deyue High-tech Seed Company, told China Daily: "I prefer to seek investments from business partners rather than applying for loans from banks because the procedure is very complicated. That's even though my company is involved in the sectors that the government is encouraging."

Experts suggest that western regions learn from foreign countries' experiences so as to simplify procedures for obtaining loans.

(China Daily November 19, 2004)