Help for small firms a priority for Chinese government

The Chinese government is to implement policies to support the country’s small and micro-sized enterprises and online platform operators, to help them expand their businesses and provide a boost to the economy.

The State Council, the nation’s Cabinet, announced the proposals, which will also address business financing and access to credit.

Luo Wen, head of the State Administration for Market Regulation (SAMR), the country’s top market regulator, said that “the country will work to introduce innovative quality financing and credit enhancement policies to ease financing challenges for SMSEs”.

Luo added that financial institutions will be encouraged to factor in a company’s management credentials and brand reputation when issuing loans. Together with equity, funds and bond-based financing tools, the country aims to generate a credit enhancement and financing quota of 300 billion yuan ($42 billion) each year.

He said that SAMR will issue guidelines to platform operators to help merchants enhance brand awareness, increase market transactions and harness online traffic.

It will help businesses enhance their ability to utilize online traffic more efficiently and tap into larger audiences, he added.

Beyond SMSE support, Wang Jiangping, vice-minister of the Ministry of Industry and Information Technology, said the ministry will collaborate with the China Securities Regulatory Commission to launch the third batch of specialized regulatory boards to guilde the so-called ‘little giant’ companies in regional equity markets.

‘Little giant’ companies refer to small and medium-sized enterprises that typically specialize in niche sectors, have large market shares and boast the potential to drive innovation. By the end of June this year, China had cultivated 12,000 such enterprises.

The ministry also plans to sign a strategic cooperation agreement with the Beijing Stock Exchange to further streamline financing channels for these firms, Wang told a recent press conference in Beijing.

At the conference, the vice-minister said that China is also placing a greater emphasis on developing unicorn companies – start-ups valued at over $1 billion – in emerging high-tech fields such as 6G and brain-computer interfaces.

Wang said a unified system will be established nationwide to co-ordinate policies between central government and provincial government to aid in the development of unicorn companies.

Unicorn companies will be supported in technological innovation, and will be encouraged to address national strategic needs through unique, proprietary technologies, Wang said, adding that more efforts will be made to increase financial backing for these unicorns, including support for public listings, mergers and acquisitions, to accelerate their growth.

Despite the growing number of unicorns in China, the country still lags behind the United States in terms of the overall number, according to the Hurun Research Institute. Last year, China had 340 unicorns while the US had 700.

Wang Peng, a senior researcher at the Beijing Academy of Social Sciences, said that encouraging SMSEs, platform firms and unicorn companies are part of broader efforts to spur the private sector, which is of great significance to counter the current global economic slowdown.

A report on private sector development by the State Council showed that private companies accounted for 92.3% of the country’s total number of business entities in 2023, a significant increase from 79.4% in 2012.

Healthy growth in foreign trade

Meanwhile, China’s foreign trade grew by 5.3% year-on-year to 32.33 trillion yuan ($4.57 trillion) in the first three quarters of 2024, according to statistics from the General Administration of Customs (GAC).

The country’s exports surged 6.2% on a yearly basis to 18.62 trillion yuan and imports rose 4.1% year-on-year to 13.71 trillion yuan.

The country’s foreign trade hit a record high in the first three quarters of this year, with each quarter exceeding 10 trillion yuan. Its trade value with over 160 countries and regions continued to grow during this period, said Wang Lingjun, the GAC’s vice-minister.