China will step up aid and assistance to market entities, especially micro, small and medium-sized enterprises, and strengthen its political reserves, to ensure inter-cyclical adjustments, the executive meeting of the State Council decided on Wednesday. chaired by Prime Minister Li Keqiang.
“Supporting market entities, especially the many micro, small and medium enterprises in all sectors, is essential to maintain steady growth and jobs. The experience of last year shows that such an approach is suitable for the national conditions and the economic structure of China, ”said Mr. Li.
Relief policies will be strengthened. The small business retrocession quota will be increased by 300 billion yuan ($ 46.40 billion) this year. Local banks will be supported in providing loans to micro and small businesses and self-employed workers.
Policies on loan interest reductions and incentives for industries and businesses severely affected by COVID-19 will be fine-tuned. Banks will be encouraged to provide more inclusive credit-based loans to micro and small enterprises.
A risk compensation mechanism for the national financing guarantee fund will be put in place to help guarantee institutions provide guarantees to micro and small enterprises that lack collateral or credit records.
The People’s Bank of China will provide support in the form of rediscounts, in order to ease the pressure on micro, small and medium enterprises caused by payment arrears.
“Micro, small and medium enterprises create more than 90 percent of jobs and generate more than 60 percent of GDP in China. Since the beginning of this year, due to rising production and operating costs caused by rising commodity prices, associated with accounts receivable and the impact of COVID-19 and natural disasters, they have been faced with increasing difficulties. Small businesses have yet to gain a foothold, and we need to take this seriously, ”Li said.
The reform of government functions will be further deepened in order to improve the business environment and reduce institutional transaction costs. Arbitrary charges and charges will be strictly prohibited. Sustained efforts will be made as part of the special campaign against late and late payments.
Intercyclical adjustments will be made holistically. Special obligations of local governments will be exploited to increase efficient investment. Follow-up policies will be studied and put in place if necessary upon the expiration of certain policies benefiting businesses.
“There needs to be extensive policy research on inter-cyclical adjustments. In view of recent developments, support policies about to expire should be better assessed and preparedness strengthened in political reserves,” Li said.