The problems faced by China's small businesses are gradually easing after the government raised tax rebates for some industries and asked banks to lend more to them, the National Development and Reform Commission said yesterday.

"The government is attaching great importance to the growth of China's small and medium-sized enterprises. We have rolled out a series of policies to bolster their expansion and plans to issue more to help them overcome the current difficulties," said the nation's top economic planner in a statement.

In the first half this year, more than 67,000 SMEs went bankrupt due to tight credit control, rising costs of raw materials and labor, as well as weaker external demand.

"However, more than 19,800 newly-established SMEs entered the market in the first half, and the phenomenon is normal under the market economy," said the commission.

From January to May, SMEs had an output of 6.58 trillion yuan (US$960 billion) and a total profit of 625.8 billion yuan, a jump of 30.8 percent from a year ago, according to the commission.

To bolster the export sector which has many SMEs, the government has raised the export tax rebates on textiles and garments from 11 percent to 13 percent last month.

The banking regulator also asked commercial lenders to relax lending curbs for SMEs and for more loans to be given to them.

"The government hopes to boost confidence among SMEs and to reiterate that it stands behind them," said Li Maoyu, an analyst with Changjiang Securities Co. "The statement is issued after the Olympic Games, which may be a sign that the government doesn't expect an economic slowdown."

(Shanghai Daily September 5, 2008)