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China fleshes out support policy for SMEs
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China's State Council, the Cabinet, issued Tuesday a document to strengthen support for the development of the country's small-and medium-sized enterprises (SMEs).

The government will deepen reforms in the country's monopoly industries,lowering the market access threshold for the SMEs and creating a more open and fair competition environment for SMEs, said the document.

According to the document, the government will optimize its procurement mechanism, raising the purchase proportion of commodities, engineering and services from the SMEs.

The government will grant a one-year reprieve on social security fund to the SMEs in operational difficulty amid the global financial crisis, in a bid to reduce financial burdens and protect the interests of the SMEs.

It will expand channels for the SMEs to raise capital through encouraging banks to lend more to the SMEs, stepping up making policies to guide private capital to tap into the country's financial system.

The government will increase tax breaks to the small firms with an annual taxable income below 30,000 yuan (4392.4 U.S. dollars) from Jan. 1 to Dec. 31 of 2010.

According to the document, the government will also encourage the SMEs to improve their technological innovation capacities, enhance the product quality, and promote development in energy conservation and clean production.

In China, SMEs refer to enterprises where staff numbers are less than 2,000, annual revenues are under 300 million yuan, or with total assets under 400 million yuan.

The move followed a framework announced by the government in August to shore up the SMEs hit by the global economic downturn.

The SMEs have long had difficulty in fund raising and are seeing declining profits due to weak market demand, Industry and Information Technology Minister Li Yizhong said at the opening ceremony of the 6th China International Small and Medium Enterprises Fair on Tuesday.

"We should take more positive and effective measures to help the SMEs ride out the crisis," he said in Guangzhou, capital of south China's Guangdong Province.

Shen Cai, a small trader, welcomed the new policy.

"In 2010, our firm may only have to pay half of the tax as before," Shen said in excitement in Guangzhou. "This is a real support to the small businesses struggling in the financial crisis."

Li said the central government will earmark 9.5 billion yuan (1.4 billion U.S. dollars) in 2009, nearly doubling the 4.9 billion yuan last year, to help the SMEs innovate technology and explore market.

(Xinhua News Agency September 23, 2009)

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