China is considering giving incremental financial support to the
nation's 9 million small and medium-sized enterprises (SMEs), a
senior legislative official revealed.
A
draft law on the promotion of SMEs demands the central budget
allocate special funds to aid SMEs in their pursuit for credit
guarantee.
It
was submitted to the Standing Committee of the National People's
Congress (NPC) - China's top legislature - for preliminary reading
in December.
SMEs, accounting for 95 percent of all Chinese enterprises, have
played an indispensable role in invigorating the national economy
and maintaining social stability by promoting market competition,
increasing job opportunities and pushing forward technical
innovation, said Zeng Xianlin, vice-director of the NPC Financial
and Economic Committee.
These enterprises have offered three-quarters of urban job
opportunities during the nation's economic transformation process,
providing jobs to more than 230 million laborers from rural areas
between 1976 and last year, according to committee figures.
However, Zeng said these enterprises have faced more difficulties
than large enterprises in receiving funding, raising their
technological levels, attracting qualified professional personnel
and accessing information.
"They will meet more intense competition now that China has entered
the World Trade Organization,"
Zeng said, adding it is a common practice of market economies to
pass legislation for the promotion of such enterprises.
The special funds from the central budget are also designed to
offer guidance and service for the creation of SMEs, information
consultation and training of employees, as well as support for
technical innovation and the promotion of international markets,
said Zhu Shaoping, a division chief with Zeng's committee.
Zhu said great difficulty in getting loans, the slow accumulation
of original capital, and the lack of powerful policy orientation in
investment are three major problems facing Chinese SMEs.
The special fund will offer long-term and stable monetary support
for the development of these enterprises, Zhu said.
The draft law has also made provisions on the establishment of
credit guaranty institutions for the SMEs to lower the credit risks
of commercial banks and encourage financial institutions to
increase loans to the SMEs, Zhu said.
A
trial operation to set up credit guarantee institutions for SMEs
has been conducted in more than 100 cities in China and a 6 billion
yuan (US$725 million) security fund has been used, indicate
committee figures.
(China
Daily February 19, 2002)