During recent Two Sessions meetings in Zhejiang Province, an official from Wenzhou was quoted as saying that if banks continue to withhold loans from local businesses, the government will withhold deposits from banks.

Frankly speaking, commercial lenders deserve their reputation for fickleness when it comes to loan management. Many banks in China have a strong preference for big companies, especially State-owned firms, and are often unwilling to lend to small- and medium-sized enterprises (SMEs). Yet, banks have also been known to cut their financing even to large government-backed conglomerates based on hints of financial trouble.

This trend is a particular source of consternation in Zhejiang, a province long known for its strong SME community.

It is understandable if local governments are protective of their companies, but is it proper for officials to use government deposits as a weapon? One can't help but wonder if there are more rational ways to entice banks to be less stingy with credit.

The author is Yu Fenghui, a commentator.