China’s ‘financially unhealthy’ small firms have a serious cash-flow problem that threatens to topple more dominoes, survey finds
- The critical issue ‘affects the lives of 180 million people’, weighing on nation’s economic backbone and impeding job growth, according to academy assessment
- Small and micro-sized firms are considered vital to the health of China’s overall economy, but they are also the most vulnerable to its bumpy recovery
China’s small businesses, which are critical components of its private sector and big drivers of urban jobs, are still contending with severe payment delays and other operational difficulties, according to a recent financial health survey.
The findings, compiled by the Chinese Academy of Financial Inclusion at Renmin University in Beijing, were based on data collected from more than 2,300 small and micro-sized firms across the country.
In a subsequent report, the academy flagged the most pressing problems while offering suggestions for financial institutions and governments to more effectively empower small firms, boost market confidence and enhance operational resilience.
The report, released on Tuesday, called attention to “the most critical cash-flow issues” for China’s small businesses, and warned that the outsized problem of mounting arrears could be “a domino that knocks over the others”.
The survey gauged the financial situations of such firms in terms of their daily financial management, risk prevention and capital management.