Zheng Xinli, former deputy director of the policy research office of the Communist Party of China, urged that more efforts should be made to help small and medium-sized enterprises.

"As far as I know, the average interest rate for private lending in Wenzhou climbed to 23 percent last year, since companies cannot get loans from the mainstream banks. How can companies make a profit with such high interest rates?" he said.

"Reform should be carried out in the financial system to better support the development of SMEs," Zheng said, adding that it is a must to adopt interest rate liberalization and allow private capital to set up financial institutions.

But both are unlikely to happen within this year, he said. Once the central government makes the decision, it will not take a long time to implement.