Initiative will allow enterprises to overcome cash shortages and enhance their development
A plan rolled out by the central authorities to create a level playing field and boost financing channels for small and medium-sized enterprises will inject fresh impetus for the growth of SMEs, officials and experts said.
The guideline on promoting the healthy development of SMEs, jointly released by the general offices of the Communist Party of China Central Committee and the State Council on April 7, highlighted the importance of creating a more enabling environment and solving the difficulties faced by the SMEs in financing procedures.
Wang Jiangping, vice-minister of industry and information technology, said the guideline has provided more targeted, concrete and effective measures to tackle the growing downward pressure faced by SMEs.
The SME sector in China, which accounts for more than 90 percent of the total number of businesses, has contributed to over 50 percent of the country’s tax revenues, over 60 percent of GDP, over 70 percent of innovations in technology and over 80 percent of urban employment, according to the State Council.
“The guideline will play a significant role to boost the morale for the development of SMEs and promote their healthy and sustainable development,” Wang told a news briefing on Friday.
The guideline called for more attention to the problems impeding further growth of SMEs, such as rising costs, financing difficulties and inadequate innovation capability.
To solve these problems, the country will improve the business environment for SMEs by further broadening market access, simplifying administrative procedures and strengthening market supervision and regulation, according to the guideline.
A variety of financial policy tools, including targeted required reserve ratio cuts and the use of small and medium-sized enterprise loans as collateral for medium-term lending facilities granted by the central bank, will be employed to make it easier and cheaper for businesses to access credit through subsidies and bank loans.
More favorable policies in financial and tax policies, including exemptions for interest received from value added tax, tax breaks for small firms and startups, a lower social security contribution ratio and an increase in government procurement, will also be made available to SMEs, the guideline said.
In order to create a level playing field for SMEs, Wang said the authority will introduce a negative list mechanism for market access to remove unreasonable barriers and restrictions to help SMEs.