SMEs get helping hand from govt

China's cabinet unveiled plans Monday to strengthen financial support for cash-starved smaller firms, in its latest bid to ­bolster the slowing economy and create jobs.

"New credit extended to small and micro-sized enterprises (this year) will not be below 2012 levels," the State Council announced in a plan on the government's website.

The cabinet also encourages the development of financial ­institutions, including rural and private banks, tailored to the needs of small businesses.

Credit rating and listing of small firms in the stock market are encouraged to allow small firms to finance, while various fees are to be reduced to ease the burden on small firms, said the State Council.

"The government has never paid such close attention to the development of small businesses," Zhou Dewen, president of the Wenzhou Council for the Promotion of Small and Medium-sized Enterprises, told the Global Times Monday.

Small firms used to be neglected compared to large State-owned enterprises, but now the government realizes that small businesses must be allowed to play an increasingly critical role in creating jobs and driving the economy, Zhou said.

Most small firms, ­especially those involved in exports, are struggling to survive amid falling new orders and rising costs, while massive ­bankruptcy among small firms would ­damage employment and ­economic stability, Zhou told the Global Times.

There are over 51 million small and individually owned businesses, accounting for 99 percent of all enterprises, contributing over 60 percent of the GDP, providing 75 percent of the jobs and half of the fiscal revenues in China.

By the end of June this year, the new credit extended to small firms reached 1.03 trillion yuan ($168 billion), up 10.4 percent from the same period of 2012, according to the central bank.

A firm with annual business revenues of less than 20 million yuan is defined as a small business and firms with less than 3 million yuan in revenue are classified as micro-sized firms, according to the Ministry of Industrial and Information Technology.

This new policy brings new opportunity to entrepreneurs.

"I may consider restarting my business," said Xiao Yongchang, who suspended his business selling energy-saving products in 2011.

Due to a lack of credit and high risks, it was very hard for the small firms to get bank loans and investment, Xiao said. Many of these investors tried to invest in high-return projects such as the property market instead, Xiao said.

Although the government has also called for the upgrading of technologies and energy-saving goods, it is different in reality as very few customers are really influenced by energy-saving policies, he said, citing an example of the difficulties his firm used to encounter.

The procedures for setting up a business are also very complex under different ­market regulators, another pressure weighing on small firms, Xiao said.

A new measure starting in August scraps taxes for small firms with monthly sales revenues of less than 20,000 yuan, a move expected to save 30 billion yuan tax payment for 6 million small businesses per year.