1、New Wave of Growth in ChinaInnovation through Developing SMEsMasterCard Worldwide Executive Summary After decades of unprecedented growth China now needs a new growth model based on innovation and higher value manufacturing and service.Focusing on the right areas to enhance its innovation ecosystem

2、will be important and SMEs may have to be at the center of this;SMEs arekey drivers of innovation in most countries.Countries like Germany have fully taken advantage of this SME strength,but China has significant work to do to address obstacles its SMEs face.There are several obstacles,but two are t

3、he focus of this paper:the lack of access to low-cost finance and the significant inefficiencies in their financial supply chain.While other issues,notably human capital and fair regulation and rules of law are of great importance too,we shall stay focused on the two financial ones we lay out above.

4、Based on this scope and our global assessment and Chinas position,we believe China could implement a number of measures to address the obstacles faced by SMEs including 1)Subject SOEs to market discipline 2)Develop an SME lending focus 3)Reform its interest rate regime and 4)Leverage innovative solu

5、tions to improve financial supply chain efficiency.1New Wave of Growth in China-Innovation through Developing SMEsMasterCard Worldwide New Wave of Growth in China-Innovation through Developing SMEs Chinas new wave of growth hinges on its ability to innovate Over the past 3 decades,China has succeede

6、d in rapid industrialization to become the worlds factory where the tasks of industrial production across most industries are being outsourced to China.This wave of growthin China has been driven by a global division of labor as the world has recognized Chinas comparative advantages including large-