Small biz needs financial assistance
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Small businesses are major engines of growth and job creation and should receive financial assistance from banks and the government, according to members attending the Third Session of the 11th National Committee of the Chinese People's Political Consultative Conference (CPPCC), the top advisory body.
Wang Yongzheng, vice president of the Tianjin Commercial Association, said the financial crisis had hit small and medium-sized companies harder than state-owned enterprises (SOE).
Wang is a member to the Chinese People's Political Consultative Conference (CPPCC). The CPPCC and the National People's Congress make up the "two sessions" of China's annual parliamentary meeting.
"Thanks to the government support, most big SOEs survived the crisis. But smaller firms found it difficult to get financial help," he told China.org.cn.
The government launched a 4 trillion yuan (US$570 billion) stimulus package to battle the crisis but Wang said "Small businesses create 75 percent of China's jobs but they only got a small part of the package."
As a representative of small and medium-sized enterprises, Wang hopes central government will adopt favorable policies for smaller companies.
Leading bankers also urged regulators to give tax incentives, cut red tape and boost credit to small businesses. On March 3, CPPCC members Ma Weihua, president of China Merchants Bank Co, Dong Wenbiao, chairman of China Minsheng Banking Corp, and Yan Bingzhu, chairman of the Bank of Beijing, called on the government to do more to support lending to small businesses.
Ma said in a proposal: "Lending from commercial banks is still the main financing avenue for small and medium companies in China. More efforts should be made to channel banking support to small businesses."
Ma said regulators should offer tax incentives, simplify the bad loans write-off procedure and provide funds to cover risks so more banks will offer small business credit.
Dong urged the Ministry of Finance and the State Administration of Taxation to introduce tax incentives, including cutting corporate income tax and business tax.
According to a Shanghai Daily report, Dong suggested a corporate income tax of 15 percent for small credit facilities from the current 25 percent which the majority of companies in China pay.
On March 4, President Hu Jintao joined a panel discussion with CPPCC members from the non-communist China National Democratic Construction Association and the All China Federation of Industry and Commerce, an organization of private entrepreneurs.
Hu said China will unswervingly encourage and support the development of private businesses while also unswervingly seeking to strengthen the public sector, according to a Xinhua report.
Cai Guoxiong, chairman of China Financial Leasing Group Limited, said the government should encourage private funds to invest in small businesses.
"On one hand, it will promote the development of capital markets; on the other hand, small companies will get the money they need," Cai said. "But how to realize these two points is a matter for the government."
Wang Yongzheng said the government should use the capital market to allocate funds.
"The government should set up special funds to help smaller companies," he told China.org.cn
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