China is to make more effort to promote the development of small and medium-sized enterprises (SMEs), a top government official said.

"The Chinese Government will continue to perfect relevant laws and regulations and improve services for SMEs, to support and boost the healthy development of SMEs'," said Ma Kai, director of the National Development and Reform Commission.

The absence of a sound legal and policy-making framework to protect and support SMEs made it difficult for the sector to grow in China.

Over the past two decades, SMEs have grown into an important force behind China's dynamic economy.

They make up half of China's gross domestic product (GDP), 60 percent of the total exports, and 43 percent of the country's total tax revenue.

They also provide 75 percent of the total jobs in urban areas, helping the country relieve the pressure in the job market.

"The commission is working on a series of measures concerning government procurement, venture capitals, establishment of new ventures, technology development and enterprise credit system, to further improve the external environment for SMEs and private businesses in China," Ma said.

Meanwhile, the commission is to publish a guiding directory, listing key industries, which SMEs are encouraged to engage in.

The government will also help create a favorable environment for new ventures and create a supportive mechanism for SMEs, helping them cut initial costs, Ma said.

He said at a seminar held earlier this week that China has improved the policy environment for SMEs since the SME Promotion Law was put into effect on January 1, 2003.

During the past year, the central government allocated special funds for the development of SMEs, offering management training for more than 20,000 owners, setting up a credit rating system for more than 4,000 SMEs in five major cities including Beijing, and helping nearly 10,000 SMEs in six major cities such as Shanghai and Chongqing start business.

In addition, the credit guarantee system for SMEs has improved. According to incomplete statistics, by June 30, 2003, China had established nearly 1,000 credit guarantee organizations for SMEs, raising 28.7 billion yuan (US$3.4 billion) and providing credit guarantees for some 50,000 SMEs, with a total guarantee value of nearly 120 billion yuan (US$14.5 billion).

As a result of the improving guarantee system, the SMEs which received credit guarantees increased employment by 580,000 and sales revenue by more than 110 billion yuan (US$13 billion).

To broaden SMEs' financing channels, the commission has been working in co-operation with commercial banks, such as the State Development Bank and the Guangdong Development Bank, during the past year, to provide loans for SMEs in some cities.

(China Daily January 2, 2004)