China's push to strengthen its SMEs is gaining momentum

China is not known for its resilient small- and medium-sized enterprises yet. Still, for July, the SMEs' PMI figure, which serves as an important indicator of the manufacturing sector, suggests that China's internal economic growth is gaining momentum. It surpassed the 50 threshold for the first time since April 2012.

These gains reflect a strong policy momentum by the central government to boost the role of SMEs in the Chinese economy.

Recently, Premier Li Keqiang noted that 1.68 million businesses were registered nationwide in the first half of the year, up almost 60 percent year on year. Among them, almost 1.58 million were private businesses, which provided more than 10 million jobs.

Li's message on SMEs was clear: it is a great start, but much more remains to be done.

Unlike their predecessors, the new Chinese leadership knows only too well that SMEs are the true growth engine in most economies. Ever since the leadership transition, Li and his reformers have paid increasing attention to the Chinese business environment, SMEs and entrepreneurship.

Last autumn, the launch of the Shanghai free trade zone allowed SMEs in the city to enjoy a wider range of opportunities to upgrade and transform their industrial structures. In the past, many of these SMEs have been labor intensive, focusing on manufacturing. In the future, they hope to become more capital intensive, focusing on product quality and design.

The Shanghai free trade zone is just one initiative in the broad front of economic reforms that are creating new momentum across the mainland.

Late last month, Li criticized banks for only issuing large loans to big businesses. In turn, the State Council noted that many small Chinese companies continue to face financing challenges, which could fuel economic risk.

The push to strengthen SMEs is something new in the Chinese economy. But what is the role of the Chinese business environment, SMEs and entrepreneurship internationally?

The World Bank's "Doing Business" report measures the costs to firms of business regulations worldwide. The best performers feature Asia's tiger economies, such as Singapore and Hong Kong, the top two. China, at 96th, has steadily improved its position.

However, taking into account that it ranks 29th in the World Economic Forum's Global Competitiveness Report, but only 96th in the World Bank report, much remains to be done to improve the Chinese business environment.

So, just how entrepreneurial is China?