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Official: China Mulls More Support to SMEs

China is poised to provide a series of measures to help small and medium-sized enterprises (SMEs) to cope with challenges brought about by the global economy uncertainty, a senior official said on Wednesday.

Wang Liming, director general of the SMEs department of the Ministry of Industry and Information Technology (MIIT), said the country would continue researching measures to help these firms better tide over difficulties.

"The government would support these companies' efforts of technology innovation, product mix upgrading and getting a bigger share of the global market," he said.

Chinese industry faced a grim situation, as the global financial crisis would have a deep impact on the industrial and information technology sectors, Zhu Hongren, a senior official with the MIIT, said on Wednesday.

Zhu said the imbalance between weakening demand and expanding capacity would become more problematic as the crisis deepened. Labor-intensive and export-oriented businesses would be hurt as prices of energy and raw materials would continue fluctuating.

Figures revealed that since the beginning of last year, raw material price for Chinese SMEs has increased by 11 to 15 percent year on year, while that of average product ex-factory price is up only about 5 percent.

Wang said the country might further raise the tax rebates rate by one percentage point for some labor-intensive industries in the near future to help them cope with shrinking profit margins because of slacking market demands, the yuan's appreciation and rising production costs.

China raised tax rebates on November 1 for 3,486 items ranging from labor intensive industries such as textile, garment, toy, hi-tech and high added value sectors like anti-AIDS drugs.

Wang added the country would also provide SMEs better access to getting loans. Experts held that financing difficulty was a critical bottleneck to the growth of the Chinese SME sector.

(Xinhua News Agency November 6, 2008)

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