More Policy Supports Needed for Small Firms in China

A Chinese political advisor Tuesday said more supportive policies in finance, taxation and administration should be given to the mushrooming small-sized enterprises (SSEs).

SSEs were faced with difficulties, such as the lack of preferential policies, taxation support and financing channels, and too many administration procedures and fees, said Song Beishan, vice chairman of the All-China Federation of Industry and Commerce.

They also faced enormous pressure from powerful large-sized enterprises in the monopolized sectors, said Song, a member of the National Committee of the Chinese People's Political Consultative Conference (CPPCC).

The CPPCC National Committee, China's top political advisory body, is holding its annual session in Beijing.

The rise of raw material prices, labor cost, the Chinese currency's exchange rate, and trade protectionism has added to the difficulties, together with pressures for improving product quality, cutting emission and saving energy.

Song said the government should consider allowing the establishment of rural banks, micro-finance companies and rural funding cooperatives with private firms as the main investors.

Policies should also be made to guide state-owned commercial banks to raise the percentage of loans to SSEs in their total loans by developing more financial derivatives and services tailored for the SSEs, Song said during a plenary session of the CPPCC National Committee.

China had 8.4 million private firms and 34 million self-employed businesses, among which 99 percent are small enterprises that hire 170 million people, said Song.

Small and medium-sized enterprises are enterprises with annual business revenue below 300 million yuan (US$45.7 million). Firms with revenues of less than 30 million yuan are considered small, according to standards set by the National Bureau of Statistics.