Q: The rapid development of small- and medium-sized enterprises has absorbed a large proportion o he country's labor force. How has China encouraged and supported the development of these enterprises?

A: Since China's reform and opening up, small- and medium-sized enterprises have grown very fast and are playing an increasingly important role in the country's social and economic development. In fact, they have become a major force to ensure economic growth, create employment and optimize economic structure.

According to statistics, 99 percent of Chinese enterprises are small- and medium-sized, which at present provides jobs for 75 percent of the country's employed, produces more than 60 percent of exports, and creates 45 percent of national tax revenue, 70 percent of increased industrial output and more than 55 percent of the gross domestic product.

It should be stressed that small- and medium-sized enterprises have become fundamental to reducing employment pressure and maintaining social stability. The absolute majority of jobs in the country's rural areas are provided by small- and medium-sized enterprises, especially township enterprises.

Of 150 million workers in the manufacturing industry, small- and medium-sized enterprises employed 110 million, or 73 percent. In recent years, a large number of workers of SOEs have been laid off during China's adjustment of the economic structure. In the meantime, growing surplus of rural labor continues to flood into cities for employment. Under such circumstances, the role of small- and medium-sized enterprises in absorbing labor forces has become even more significant.
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In order to stimulate the development of small- and medium-sized enterprises, the Chinese Government issued a policy paper in February 2005 to encourage, support and guide their development
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The specific measures include: setting up a special development fund; studying new ways to improve management of family businesses and small companies in terms of accounting, taxation and statistics collection; exploring organization mechanisms suitable for family businesses and small companies; supporting people in starting their own business; and providing technology, information and policy incentives to newly started small enterprises.

Concrete measures have also been taken to make it easier for small- and medium-sized enterprises to get bank loans and to be listed in domestic stock markets.

Engineers in the Changzhou Machine Tool Factory overhaul a proprietary digital control machine tool. Industrial enterprises in Jiangsu Province participate actively in international market competition.