China extends economic support for key small firms, aims to ‘deliver real results’
- Premier Li Keqiang laid out the latest support measures for micro, small, and medium enterprises (MSMEs) during Wednesday’s State Council meeting
- Small firms in China provide more than half of the national gross domestic product, 50 per cent of the tax revenue and 80 per cent of urban employment
China will extend support to firms that form the backbone of its economy, with the latest financial measures viewed as a move to boost refinancing which “will become increasingly important in the future”.
“The MSMEs and the self-employed are facing great difficulties. In the first half of next year, the impact of the commodity price rises will be felt by downstream enterprises and add to their pressure. We need to take multipronged measures to help the smaller businesses and the self-employed to get through this difficult period,” Li said, according to the official Xinhua News Agency.
“These are relief policies for businesses. We must get them started fast, make sure they’re easy to do, and deliver real results.”
Supply-chain disruptions, rising raw-material and land-rental costs, power cuts, poor international trade and rising exchange rates have placed additional pressure on firms in China that were already reeling from the impact of the coronavirus.
The People’s Bank of China will provide funds to local banks that issue inclusive loans to MSEs and the self-employed from the beginning of next year until the end of June 2023 – equivalent to 1 per cent of the increase in their loan balance – to encourage them to issue more such loans.
Inclusive loans provide financial support for disadvantaged and low-income segments of society that may lack the financial history to be eligible for traditional loans.