China is set to “remove all sorts of unreasonable barriers and restrictions” to help small and medium-sized enterprises (SME) amid the trade war with the United States. SMEs constitute most of China’s privately-owned enterprise and are thus vital to country’s overall employment and economic growth.
According to a comprehensive policy guideline jointly released by the Central Committee of the Communist Party of China and the State Council, Beijing plans to make it easier and cheaper for businesses to access credit through subsidies and certain bank loans. The government aims to create a level playing field for businesses, especially with regards to market entry and regulation.
“SMEs are a dynamic power for national economic and social important and is critical for expanding employment, improving people’s livelihood, and to foster innovation,” the guidelines said. “For now, they are facing problems of rising production costs, difficulty in obtaining credit and insufficient capabilities to innovate. These issues demand high attention.”
The need for the Chinese government to support small businesses became even more apparent last summer when it began its trade was with the US. Small private businesses are more vulnerable to trade disputes and an economic slowdown than state-owned enterprises. State-owned businesses are often bigger and enjoy favourable benefits from the government and banks, even though they contribute most of the growth and employment.
Employment remains the top priority on Premier Li Keqiang’s agenda this year. China has vowed to create 11 million new urban jobs in 2019 and cap the surveyed urban unemployment rate at 5.5 per cent.
According to economists from Morgan Stanley, slower investment growth, led by property construction and manufacturing; coupled with subdued exports may result in China’s gross domestic product slowing to 6.2 per cent in the first quarter.
The National Bureau of Statistics is due to release the first quarter economic data on April 17.