Private Investors Elbowed Out by High Borrowing Cost, Research Shows

(Beijing) – Private firms in China are struggling with punitively high borrowing costs even though they tend to use capital more efficiently than state-owned enterprises, research by investment bank China International Capital Corp. (CICC) shows.

On average, private companies needed to pay an annual interest rate of 9.9 percent on loans in the second quarter, about 6 percentage points higher than those for SOEs, according to a report the investment bank published last week. The gap between the two sectors' borrowing costs was only 3 percentage points at the end of last year, the report shows.