China is beefing up financial support to small businesses to help them cope with a sharply slowing economy and soaring input costs.
The Chinese State Council released three documents in the past several days, outlining measures to help small and medium-sized enterprises (SME) weather the downturn — from encouraging local governments to roll out discounts for power use to organizing Internet companies to provide cloud and digital services to SMEs.
Government officials yesterday detailed those plans at a briefing in Beijing, along with a list of economic challenges faced by businesses.
“SMEs face many problems and difficulties due to the complicated domestic and overseas situation,” Chinese Vice Minister of Industry and Information Technology Xu Xiaolan (徐曉蘭) told the briefing.
Xu highlighted factors such as elevated costs for raw material, lack of orders, high wages and difficulty in hiring, problems in getting financing and payments, high transportation costs, sporadic COVID-19 outbreaks and electricity shortages.
Those factors have affected the operations of small businesses, she said, adding that the profits of industrial SMEs expanded just 3.6 percent in September from a year earlier.
Industrial SMEs refer to small companies with revenue of 20 million yuan (US$3.1 million) or more.
Small businesses contributed more than 60 percent of China’s GDP and more than 80 percent of jobs, People’s Bank of China Governor Yi Gang (易綱) said in 2018.
More than 99 percent of China’s 46 million enterprises are small firms, Xu said, adding that those in the industrial sector employed 50.1 million workers, accounting for 68 percent of overall employment in the sector.
The situation of manufacturing SMEs declined further this month, a regular survey by Standard Chartered PLC of more than 500 firms showed.
The current performance index for those firms dropped to a nine-month low, even as the broader index improved.
Policymakers have highlighted the need for extra support for small businesses, suggesting a more concerted effort to help the sector.
Yi last week said that the central bank would keep its focus on SMEs and green finance.
Several steps have already been taken in the past few months, such as allowing smaller manufacturing firms to delay tax payments in the fourth quarter and providing 300 billion yuan of low-cost funding to banks for lending to SMEs.
At the briefing, Zou Lan (鄒瀾), head of the central bank’s Financial Market Department, said that outstanding loans to small firms through an inclusive finance program had jumped 26.7 percent to 18.6 trillion yuan from a year earlier by the end of last month.
The weighted average rate of such loans granted last month was 4.94 percent, down 0.14 percentage points from December last year, Zou said.
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