Small and medium-sized enterprises (SMEs) are the driving force behind China's national social and economic development. However, they are struggling with operational challenges and increasing corporate costs following the rising charges of logistics and raw materials, power cuts in various regions, and irregular COVID-19 resurgences.
As a result, China has recently promised to avail more financial mediums and enhanced robust intellectual rights stability to encourage competitiveness in its SME sector. Experts in the industry believe these standards will improve the vitality of SMEs while helping them attain their innovation potential. Moreover, these measures will enable them to contribute to prime national development efforts.
China Introduces New Measures to Boost Competitiveness
On November 23rd, 2021, China’s State Council issued guidelines to improve SME competitiveness. The policies involved standards for promoting growth, such as enhanced intellectual ownership rights protection, varied financing mediums, and robust credit support. Through these standards, SMEs will receive access to a secure environment that endorses innovation.
Increased Funding for SMEs
SMEs seeking to develop unique products and complex techniques to enhance their innovation skills and improve their level of expertise will receive more funding. The guidelines also encouraged central government institutions to increase support for SMEs.
For example, the state innovation manufacturing center will be instrumental in strengthening SMEs and protecting them better as they market their products. According to economists, industrial innovation is critical as China targets prime economic growth.
Tian Xuan, a professor and associate dean at the PBC School of Finance at Tsinghua University, also believes SMEs have been the core drivers of national development and innovation. In the last few years, particularly, SMEs in China have experienced tremendous growth. They have been instrumental in the country's industrial evolution and supply-side rehabilitation.
The reinforced power to innovate will enable SMEs to revolutionize the economy into an intensive growth model.
How China Plans to Support SMEs
China will introduce policies to help SMEs survive challenges, according to a recently released circular from the State Council General Office. The circular highlighted relief policies like reducing fees and taxes, expanding funding support, and offering support for financial policy tools accurately and in a flexible manner.
SMEs in the manufacturing sector will be allowed to skip some tax payments during the fourth quarter, while SMEs highly affected by floods, the prevailing pandemic, and high raw material prices will get additional lending support.
The circular reiterated the importance of helping SMEs reduce pressure from increasing production costs and support for small businesses in expanding and stabilizing employment, securing power supply, increasing market demand, and guaranteeing the collection of SMEs’ due payments.
Local Authorities and Departments Will Oversee the Implementation
To ensure that all measures and recommended policies are implemented accordingly, local authorities and departments in China will execute more responsibilities, adopt innovations, and make resolute changes.
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