China to step up support for hard-pressed small firms

FILE PHOTO: People wearing face masks walk on a street market in Wuhan
FILE PHOTO: People wearing face masks walk on a street market in the early months of the outbreak of the coronavirus disease (COVID-19) in Wuhan, Hubei province, China Feb 8, 2021. REUTERS/Aly Song

November 22, 2021

BEIJING (Reuters) – China’s cabinet said in Monday it would step up financing support for small businesses hurt by soaring raw material prices, power shortages and recent COVID-19 outbreaks.

Chinese authorities have unveiled a raft of policy measures since early last year to support small businesses, which are vital for growth and jobs but which have been hit harder by the COVID-19 outbreak.

“Recently, costs of small- and medium-sized enterprises have risen and difficulties in their operations have intensified,” the cabinet said, pointing to rising raw material prices, weak orders, high logistics costs and power cuts.

Local authorities would provide relief funds for small firms that temporarily face difficulties but have long-term market potential, promising projects and competitive technology, alongside tax breaks for some firms, it said.

The central bank would step up credit support for small firms, making good use of the annual relending quotas, it said.

China would boost financing support for small firms by increasing annual relending quotas by 300 billion yuan ($47 billion), the cabinet said in September.

China would crack down on illegal activities involved in hoarding and speculating on commodities prices while futures companies should help small firms hedge risks from sharp price changes, the cabinet said.

($1 = 6.3813 Chinese yuan renminbi)

(Reporting by Kevin Yao; Editing by Edmund Blair)