Central bank plays down reports of SME failures

PUBLISHED : Friday, 19 August, 2011, 12:00am
UPDATED : Friday, 19 August, 2011, 12:00am


Rising costs put a strain on the mainland's small- and medium-sized enterprises in the first half, but there were no 'large-scale' bankruptcies in the sector, said a senior official of the People's Bank of China.

Wu Xianting, deputy director of the bank's financial department, said in a webcast yesterday that rising costs for raw materials, labour, energy and borrowing have resulted in a more difficult business environment for SMEs in the country.

'[But] the overall production and operation conditions for SMEs are normal,' said Wu. 'There is no large-scale trend of bankruptcies among SMEs, as some media reported.'

Statistics from local areas showed that, in Zhejiang province, 14,400 enterprises went out of business and cancelled their business registration during the first six months of the year. The figure is higher than the 12,400 cancellations for the same period last year, but lower than the 17,100 cancellations reported in 2008 and the 15,400 in 2009.

In Wenzhou, Zhejiang more than 8,700 companies were formed in the first half, up 28 per cent year-on-year. At the same time, nearly 4,000 companies wrote off their registrations, down 21.7 per cent.

In Dongguan, Guangdong province, 261 companies closed down, compared with 266 last year. But that is an improvement over 2008 and 2009, when more than 865 and 657 companies closed or moved elsewhere during the first half of the year due to the global financial crisis.

Wu said the government had launched a package of measures to help SMEs through a difficult period. Wu said loans extended to SMEs increased to 20.1 trillion yuan (HK$24.55 trillion) in the first half across the country, an increase of 18.2 per cent year-on-year.

Despite the central bank's comments, some analysts said the situation in the second half may become grimmer for SMEs as the global economy is likely to slow, which will hit China's export sector.