State Council to support small businesses

More preferential policies still needed: analysts

The State Council, China's cabinet, announced several measures on Thursday including tax reductions to support the development of small and micro-sized enterprises, a move analysts said will be helpful in enforcing previous supportive policies issued by the central government.

To relieve the tax burden for small businesses, the cabinet is requiring government agencies to strictly carry out the previous preferential policies of tax reduction, and pledged to release new supportive policies, according to a statement published Thursday on the website of the central government.

Tariffs on items, such as some advanced equipment that could not be purchased domestically, will be eliminated for small businesses which have invested in projects that the government supports, said the statement.

To resolve the difficulties in financing that small businesses have been confronted with, the State Council also encouraged the large banks to set up financial institutions, which will offer financing services for small and micro-sized enterprises, the statement noted.

"These measures are aimed at reinforcing previous supportive policies by the central government," Li Jianming, deputy director-general with the China Enterprise Confederation, told the Global Times Thursday.

The cabinet announced a series of measures including administrative fees cuts for small businesses in 2013.

On Wednesday, Premier Li Keqiang presided over a State Council executive meeting, in which the cabinet decided to continue its efforts to cut financing costs for small businesses.

Supportive measures announced at the meeting included enhancing financial institutions' lending capacity for small and micro-sized businesses and the agricultural sector, and encouraging private banks as well as Internet financial bodies to lend to these borrowers.

In another State Council executive meeting presided over by the premier on Saturday, the cabinet decided to cut 42 types of administrative fees for small businesses. However, Zhou Dewen, president of the Wenzhou Small and Medium-sized Enterprises Development Association, thought "the supportive measures should be more."

"The tax burden and financing cost for small businesses are still very high," Zhou told the Global Times Thursday.

The cabinet decided in September to eliminate value-added tax and business tax on small businesses whose monthly sales revenue is less than 20,000 yuan ($3,256.51).

Zhou suggested that all small businesses with less than 100,000 yuan of sales revenue per month should be allowed to enjoy the preferential policies of tax exemptions.

China Enterprise Confederation's Li echoed Zhou by saying that small businesses are still facing severe challenges especially as China's economy is still slowing down.

The flash HSBC Manufacturing Purchasing Managers' Index, which covers smaller private enterprises, fell to a six-month low of 50.0 from a final reading of 50.4 in October, indicating sluggish performance in China's manufacturing sector.