The large state-owned banks have only been comfortable lending to other big state-owned and have been reluctant to provide loans to private SMEs.

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The program provides a 100 percent government guarantee for private sector loans to SMEs.

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Private banks have an alternative to lending to SMEs, and they are exercising it with vigor: buying government bonds.

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It comes after a survey found SMEs account for more than half of private sector employment but have relatively low graduate recruitment.

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By contrast, China Merchants Bank (CMB) is fairly nimble, with 800 branches and a strong presence in private banking and small and medium-size enterprises (SMEs).

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