China needs to increase its number of small-scale banks to ease the financing plight of small and medium enterprises that are struggling to cope with the rising costs of loans, according to Li Zibing, the president of the China Association of Small and Medium Enterprises.

"China has around 1,000 banks in total including 800 new ones established after 2009, while the United States has about 8,000 banks," said Li, during the Boao Forum for Asia Annual Conference in Hainan province.

He said China's capital market has developed much slower than in developed countries, and that the finance channels for SMEs are narrow and limited which is proving a big obstacle for their ongoing development.

"Up to 90 percent of China's SMEs depend on loans from commercial banks," said Li, which means about 10 million SMEs in China have still been unable to find financing through banks.

The Chinese government has already carried out a series of policies to ease the financing difficulties of SMEs in recent years, but it will take 20 to 30 years to solve the problem, he added.