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SMEs in Trade Sector to Get Boost

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The Chinese government will allocate 33 billion yuan (US$4.83 billion) to bolster domestic trade circulation, including a special fund to support small and medium-sized trade enterprises, Chinese Business News reported on Monday.

The special fund, which could total hundreds of millions of yuan, will be used to help small and medium-sized trade companies to get easier access to financing, encourage them to buy credit insurance policies, assist with participation in exhibitions and promote their brands, according to a work conference on the nation's business credit work held by the Ministry of Commerce recently.

"Providing support to small and medium-sized trade enterprises is conducive to the growth of the domestic circulation market as well as the expansion of social consumption, which will in turn help improve the operating efficiency of the whole economy," the newspaper quoted an unnamed official with the ministry as saying.

Qualified enterprises can receive a grant from the government, which may be used to help credit guarantee institutions to make up for their loss in the case of a loan default, thus making financing more readily accessible for those companies.

Also, small and medium-sized enterprises that buy domestic trade credit insurance policies will get a subsidy worth 50 percent of the premiums they have paid.

China is facing the imperative task of spurring domestic consumption in order to attain the 8 percent goal set for this year's GDP growth, as overseas demand continues to shrink.

Exports fell for the seventh month in a row to US$88.76 billion in May, with the year-on-year decline further expanding to 26.4 percent from 22.6 percent in April. Forecast for the second half of the year remains unoptimistic.

Many small and medium-sized enterprises, which used to focus on foreign markets, have turned their eye to the domestic market instead since the second half of last year, owing to a significant drop in overseas orders amid the ongoing global economic meltdown.

With mass lay-offs and business closures in the country's coastal areas, the commerce ministry also encourages enterprises that engage in foreign trade to transfer their business to the domestic market, in hopes of kick-starting the domestic consumption market and creating new jobs.

Moreover, some local governments have taken measures to help exporters weather the crisis, including providing guarantees for their financing.

Jiang Zengwei, vice minister of commerce, said at the above-mentioned conference that commerce regulators at all levels will make joint efforts with their banking and insurance counterparts to encourage banks and credit guarantee organizations to explore innovative means in trade financing and guarantee services. He vowed to make things easier for small and medium-sized trade enterprises to get the much-needed guarantee service, apposed to lower credit risks faced by enterprises and banks.

( June 15, 2009)