Lacking financing is one of the biggest challenges for China's private sector. State owned banks still lend more to State-owned enterprises. To better serve the demand of the private sector, the opening of the banking industry to more private capital is a pressing issue at this year’s sessions.

How to inject vigor into China’s private economy? Financing may be the key.

Chinese banks usually favor big, state-owned enterprises, while financial support has long been inadequate for smaller private firms.

But Minsheng Bank is known for its tendency to finance small and medium size enterprises. Its chairman Dong Wenbiao says that’s because they are also from the private sector.

Dong Wenbiao said, "We are different from those state-owned banks. We positioned ourselves as a private-enterprise and small-enterprise oriented bank. Our strategy is to help private enterprises grow bigger and stronger, and more importantly, to build brands. And for small and micro firms, our goal is to relieve them from the oldest credit system, to enjoy financial services."

As a CPPCC member, this year his proposal is to open the banking sector to more private capital. According to his proposal, 95% of the 373 leading commercial banks in China are controlled by central government, local government, large SOEs, and local government financial vehicles. And in terms of assets, large state owned banks, and government controlled banks also account for 95% of the total assets.

This issue has been echoed among many CPPCC members. According to another banker, Ma Weiua, 95% of Shenzhen’s new technology companies list a shortage in financing as the biggest hurdle for their growth. But the assistant chairman of China’s banking regulator responded that the central government has introduced measures to encourage private banking, the problem is implementation.

Yan Qingmin, Assist. Chairman of China Banking Regulatory Commission, said, "We have formulated many policies to encourage the opening of the banking sector to private capital since last year. I think we should firmly carry out these policies and deepen our reform."

Analysts say a strong private banking sector could provide much needed capital to finance the country’s future economic growth, especially the private economy. But clearing institutional obstacles still poses a challenge, at least for now.