among which, provincial fiscal departments shall assume 10 percent of the losses while the other 70 percent is to be assumed by low level fiscal departments. by this arrangement, banks, provincial and local fiscal authorities could share risks effectively. besides, credit extension efficiency is improved with banks directly involved in credit approval. 2. introduce the experience of combining job training with micro credits, support laid - off workers to start - up business of their own. to improve laid - off workers ’ ability to start - up their own businesses, most cities have launched job training program. based on such practice, the people ’ s bank of china and the ministry of labor and social security jointly promoted the application of “ job training plus micro credits ” model in 100 cities, which is to provide qualified trainees on a selective basis with credit guarantee, lower counter guarantee threshold and encourage micro credit extensions by financial institutions. combing job training with micro credits should become a standard way for commercial banks to extend micro credit in the future, including not only fiscal subsidized loans, but also many other commercial micro credits to promote labor market development. all branches ( operations offices ) and sub - branches of the people ’ s bank of china in the capital cities of each province should directly supervise this task in two or three cities joining the pilot program and strengthen relevant researches. commercial banks should also explore further in this regard and spread successful experiences nationwide. 3. strengthen credit support for small enterprises to absorb more job - seekers small enterprises are the main sources for employment. due to both historical and personal reasons, many laid - off workers even subject to job training still cannot start up their own businesses and thus seek to be reemployed through job application. therefore, government has issued various policies to support small enterprises to absorb laid - off workers. in accordance with no. 51 bank document, small labor - intensive enterprises, which absorb laid - off workers by over 30 percent of the total number of current employees and sign employment contract for above one year, will enjoy three preferences in receiving micro - credit : first, 50 percent of the interest rate set by the people ’ s bank of china will be subsidized by the fiscal authorities with the central and local fiscal departments each contributing half of the subsidy fund ; second, 10 percent of bank ’ s micro loan losses will be covered evenly by the central and local fiscal departments ; third, local fiscal departments pay issuing commercial banks 0. 5 percent of commission fees. total micro credits extended to each small

their own business and most of them still need to be absorbed by enterprises, in addition to micro credit extension, we should strengthen credit support to small and medium sized enterprises, in particular small labor - intensive enterprises which can absorb many laid - off workers. according to our investigation and feedbacks from relevant parties, the following problems exist in implementation of micro credit policy : first, lack of policy publicity and many local governments did not understand or misunderstood the policy ; second, in some places complicated credit approval procedures and high guarantee requirements hindered borrowing ; third, lack of proper projects and high credit management cost discouraged lending activity ; and fourth, in some places, lack of coordination among different departments resulted in low efficiency. on march 18th, given the emerged problems in reemployment efforts and experiences from different regions, the people ’ s bank of china, the ministry of finance and the ministry of labor and social security jointly issued the circular on promoting micro credit to unemployed laid - off workers ( bank document 2004 no. 51 ) to adjust and improve relevant policies. promoting the implementation of micro credit policy relies on the following five aspects : 1. improve risk - sharing and compensatory mechanism for micro credit ; effectively streamline loan guarantee and approval procedures. the core issue of enlarging micro credit extension is to ensure risk compensation. at the beginning, various guarantee funds were set up by local fiscal departments and managed by guarantee institutions to share micro credit risks. but in practices, many guarantee institutions require laid - off workers to provide counter guarantee. the purpose of guarantee fund is to disseminate micro credit risks and possible losses incurred by start - up businesses, with proper counter guarantee, a laid - off worker could borrow directly from a bank without resort to the guarantee fund. the reason they go to guarantee fund is just because of their high risk profile. in some places, counter guarantee requirements restrained substantially micro credit extension. no. 51 bank document clarifies risk - sharing principles. if some regions have already chosen guarantee institutions, counter guarantee cannot exceed 30 percent of the total credit extension ; furthermore, with strengthened credit management system, each region should abolish counter guarantee requirement gradually. for regions that have not chosen guarantee institutions, their fiscal departments can deposit guarantee funds into banks which can extend micro credits to the laid - off workers independently. in the event the extend loans went sour, 20 percent of the resulted losses should be borne by the issuing bank and the other 80 percent be absorbed by the guarantee funds,