Authorities ramping up support for local SMEs

State Council fee reductions highlight govt resolve to bolster businesses

To support the development of China's small- and medium-sized enterprises (SMEs), the State Council introduced a series of fee reduction measures following a meeting held Saturday. According to reports, these latest cuts could save local small business owners more than 40 billion yuan ($6.5 billion) annually.

These reductions mark the latest in a string of steps taken this year by China's cabinet to strengthen the country's small business community. Indeed, recent months have seen central authorities slash a number of administrative fees and charges while also simplifying regulatory examination and approval processes. Such moves exemplify the government's clear intentions to create a business environment conducive to entrepreneurship and innovation. Indeed, leading figures such as Chinese Premier Li Keqiang have stressed the importance of such pursuits on multiple occasions. Such remarks echo a general belief now being voiced throughout China's political and business spheres, namely that unleashing the country's entrepreneurial potential is a necessary step along the path toward transforming the domestic economy and realizing continued long-term development.

Despite the many long-standing disadvantages which have historically been stacked against them, China's SMEs community has achieved remarkable results. According to reports, SMEs account for some 60 percent of China's economic output and nearly 80 percent of urban jobs. This is perhaps a testament to the entrepreneurial zeal of the Chinese people, for the country certainly has no shortage of willing individuals ready to try their hand at running a business. At the same time, advancements in technology have lowered market entry barriers to innumerable industries and helped countless individuals realize their entrepreneurial ambitions.

All that's missing now, it would seem, is a market climate where new ideas and business models can flourish. In China, the preconditions to cultivate such an environment are already in place or in the midst of being perfected. For example, China has a stable political and social environment which has long been a draw for foreign businesses looking to set up shops in the country. Meanwhile, authorities are busy improving the country's legal system with new rules and mechanisms geared toward safeguarding the rights and interests of small businesses. And, as evidenced by the above-mentioned supports from the State Council, authorities are working to relieve businesses of long-standing financial and administrative burdens.

Authorities have also been pursuing decentralization policies intended to reduce government intervention in the market and provide convenient services to entrepreneurs and innovators. Such policies are necessary to the furtherance of structural economic reforms. They also serve as important milestones in the government's gradual adoption of a purely supervisory role in market affairs.

Moving forward, the government should continue to ease the financial pressures on enterprises through structural tax reforms and targeted tax cuts. The recent fee reductions from the State Council will surely be welcomed by business owners and ease their financial pressures to a certain extent. The trimming of 40 billion yuan off their collected burden will also surely support the development of new products and services as well as a more level playing field where even the smallest business can enjoy a fair shot at success.