In an interview with Shanghai Daily this week, Stephen Yiu, chairman of KPMG China, shares some of his views on the opportunities and challenges facing China's economic growth. With extensive experience in banking and finance sectors, he became chairman in April 2011.

Q: What do you think China should do to improve financing for new companies?

A: China's future economy depends a lot on start-ups, but they are not getting enough funds from banks. Banks and the companies themselves both have problems. This situation has to change. When banks can choose between a state-owned company and a small private one for lending, they will always choose the former because of lower risks. That is understandable. So it is the government's responsibility to give banks enough incentives to support small businesses. Minsheng Bank is currently doing a good job in lending to small business, because the bank has been set up to do so.

Q: What will be the fastest growing industries in China in the next three to five years?

A: Finance will be important. Recently there has been some negative news on the banking industry, but the development of the finance industry should be supported by the government. The industry is not simply banks. It also involves trusts, insurance, funds and private equity. Many other industries rely on financing. The well-being of the finance industry will boost the growth of the overall economy.

It is also necessary for companies to pursue high technology, and developing outsourcing services will be a trend. China cannot rely only on its manufacturing industries. I recently visited Hangzhou, and the government there said it aims to increase the revenue contribution of outsourcing as a proportion of the city's gross domestic product by 10 percent. Many other cities have similar goals.

China has huge attractions for foreign companies because of its stable politics and supply of talent. Of course, China is facing huge competition in the market. For example, India is a mature market for outsourcing, and its population has good mastery of English. But that country has a shortage of political stability and infrastructure. Companies are always looking for alternatives to disperse risks, and so China has many opportunities to develop outsourcing.

One essential is that China should improve its education to meet international standards. The government also should adopt more incentives to encourage new industry, rather than just giving it lip service.

Q: What is the business outlook for KPMG China?

A: KPMG China's business focus has shifted in the past 20 years from helping foreign companies tap into the Chinese market to helping state-owned companies go public. Now we think the future lies with private companies, to help them get listed and expand overseas. Private companies comprise only about 10 percent of our business. We think that will increase gradually.

All economic data for first quarter point to a tough situation. It's difficult to maintain growth of 20 percent for our company, and so we are aiming for 15-16 percent growth annually for the coming years. As in other industries, expansion is no longer our priority. Within five years, China's mainland will be among the top 10 markets for KPMG globally.

Despite slower growth, we still aim to recruit around 2,000 staff a year. We are aware of the economic cycle and we are preparing for the future. We cannot cut our labor force now simply because of the current economic slowdown. What if the economy improves in five years and we are caught short of talent?