China rolls out multiple measures to help MSMEs, self-employed households pull through difficulties

A recent State Council executive meeting specified that China will further implement measures to support micro, small and medium-sized enterprises (MSMEs) and self-employed households, in an effort to stabilize the economy, as well as industrial and supply chains. Meanwhile, relevant government departments will adjust their policies promptly to ease the financial burdens on these businesses.

Although the country’s economic operation has remained generally stable despite complex domestic and international situation since the beginning of this year, the increasing complexity, severity and uncertainty of the environment for economic development has made it harder to survive for market players, especially MSMEs and self-employed households.

The Ministry of Finance (MOF) has rolled out more than 20 tax-relief policies this year, including implementing value-added tax (VAT) credit refund on a large scale to fully give back outstanding VAT credits in certain industries; extending tax and fee reduction policies that support manufacturing, micro and small enterprises and self-employed households and expanding the scale and scope of these policies; and introducing tax policies to support the development of industries facing special difficulties caused by COVID-19, according to Xu Hongcai, vice minister of finance.

At present, various policies concerning tax refunds and reductions and fee cuts are being implemented at a faster pace, Xu noted.

In response to impeded logistics recently, the Ministry of Industry and Information Technology (MIIT) has identified 1,624 key enterprises in four batches and instructed 17 provinces to establish regional “white lists” for key enterprises, said Xin Guobin, vice minister of the MIIT.

It has also built a coordination platform for key industrial and supply chains involving automobiles, integrated circuits and medical supplies to ensure the smooth operation of key industrial chains, Xin added.

The MIIT will carry out special inspections of the effects of policies aimed at reducing the burden on enterprises and promoting the development of small and medium-sized enterprises (SMEs) to make sure that these policies are effectively implemented, according to Xin.

Besides, the People’s Bank of China (PBOC), the central bank of China, and the State Administration of Foreign Exchange (SAFE) put forward 23 measures covering such aspects as supporting enterprises facing difficulties and promoting foreign trade and export.

The Bank of Communications actively improved its online foreign exchange and treasury business to enable MSMEs engaged in foreign trade to handle foreign exchange business online, thus helping them save the costs generated from seeking offline services and avoid foreign exchange risks.

The effective measures taken by China to help companies survive the difficult times have boosted the confidence of various parties.

China has a mature and resilient supply chain system and is an important global consumer market, which is helpful in promoting the development of SMEs and driving corporate innovation and eventually stimulating greater economic vitality, noted Zhang Xiaolei, president of Standard Chartered Bank (China) Limited.

“In the next three years, we will invest $300 million in China-related businesses to help clients seize the opportunities brought by China’s continuous opening-up,” Zhang said.

According to Pu Chun, deputy head of the State Administration for Market Regulation (SAMR), the number of China’s newly established market entities registered positive growth between January and April, reaching nearly 8.99 million with a year-on-year increase of 0.7 percent.

During the period, an average of 22,600 enterprises were newly established per day, which represent a relatively high level; and over 6.23 million individuals registered as self-employed business owners, up 2.9 percent compared with the same period in 2021.

“Although the Chinese economy has been faced with a complex and grim environment, the number of newly established market entities this year has basically remained stable, which reflected the economy’s strong resilience and potential,” Pu said, adding that the number of market players is expected to maintain rapid growth when the pandemic is effectively controlled and the effects of relevant policies continue to be unleashed.

Although the prolonged COVID-19 pandemic has brought difficulties and challenges to many market players, the fundamentals of the Chinese economy—its strong resilience, enormous potential, vast room for maneuver and long-term sustainability—remain unchanged.

In the future, China’s economy will show stronger dynamism with the continuous implementation of relevant policies.