The government of China has announced that it is planning to increase access to finance for small and medium-sized enterprises (SMEs) in the country.

Under the proposals, which could increase the number of jobs available, the authorities have promised that struggling firms will be able to get hold of loans, the Associated Press reports.

The move is an attempt to reduce constraints in the legal lending industry and stamp out unofficial borrowing, with bankruptcy figures rising recently.

State banks are being instructed to free up more money for SMEs and the cabinet is planning to axe taxes on lending to the sector.

"Small and medium-size companies are indispensable to promoting economic growth and job creation, technology innovation and social stability," ministers said in a statement.

Chinese premier Wen Jiabao has previously stated he wants to improve access to finance for smaller companies.

A recent report by Asahi suggested that SMEs in China are witnessing problems with employee retention and are looking at ways to persuade workers to stay.

Posted by Kate Griffin