BEIJING - CHINA is to set up institutions dedicated to providing better loan access for small enterprises, which are suffering the most from the global financial crisis, state media reported on Saturday.

The move is intended to help avoid widespread bankruptcies and lay-offs, the official Xinhua news agency said, quoting the China Banking Regulatory Commission.

Small and medium-sized enterprises in China - labour-intensive and very vulnerable to fluctuations in domestic and external demand - have been particularly badly hit by the global financial crisis.

In the first half of the year, 67,000 such firms shut down and laid off millions of employees, Xinhua said, citing the National Development and Reform Commission.

The figure did not include smaller companies with sales of less than 5 million yuan (S$1.11 million ), the news agency reported.

China's Communist Party, long been obsessed with social stability, has faced a series of high-profile protests over job losses staged recently amid concern over the country's slowing economy.

The commission said the institutions would be established by commercial banks as quasi-corporate bodies or subsidiaries that would be run independently, Xinhua said.

The institutions were expected to have a system for the provision of bad loans that was separate from their parent banks. -- AFP