Relief policies for SMEs amid COVID-19 welcomed in China

TIANJIN/CHANGSHA, Sept. 22 (Xinhua) -- Yang Yafu, 35, finally took a breath as packs of kimchi and salted vegetables were exported to Japan, and his foreign-trade company has now found more domestic marketing channels.

"Thanks to measures such as interest rate cuts and tax reductions, our business has returned to normal. Total turnovers reached 90 million yuan (about 13.9 million U.S. dollars) last year," said Yang, general manager of Tianjin Kentoku Foods Stock Co., Ltd.

While the COVID-19 pandemic is taking a toll on the real economy, China has further managed to bail micro, small and medium-sized businesses out and help them weather the difficult times.

Earlier this month, the central authorities decided that China will step up relief and assistance to market entities, especially micro, small, and medium-sized enterprises, and strengthen policy reserves, to ensure cross-cyclical adjustments.

"The new policy is in line with my company's needs. The pressure of micro, small, and medium-sized enterprises in rising production costs due to high commodity prices and epidemic impacts will be relieved," Yang said.

HEARTWARMING POLICIES

In the strengthened relief policy, the re-lending quota for small firms will be increased by another 300 billion yuan this year. Local banks will be supported in issuing loans to micro and small enterprises and self-employed individuals.

Policies of loan interest discounts and incentives for industries and firms seriously affected by COVID-19 will be fine-tuned. Banks will be encouraged to grant more inclusive credit-based loans to micro and small enterprises.

A risk compensation mechanism for the national financing guaranty fund will be put in place to support guarantee institutions in providing guarantees to micro and small enterprises that lack collateral or credit records.

Feng Tianjian, general manager of the Tianjin Xintai Technology Development Co., Ltd., said that his company has obtained 1.5 million yuan loans with low interest in 2020 to tackle short-term cash flow difficulties.

"With the government's support and strict pandemic control, I'm confident that we will see a rapid growth and the company's sales and employees' salary doubled on the existing basis," Feng said.

"The new policy has enhanced capital support from multiple channels. It improves the availability of financial resources for micro, small and medium-sized enterprises by establishing the risk compensation mechanism," said Liang Feng, an associate professor of business at Nankai University.

STRENGTHENED MOVES

China's local governments have continually implemented policies for micro, small, and medium-sized enterprises.

Zhangjiajie, a renowned tourist city in central China's Hunan Province, took measures to help companies in wholesale and retail, accommodation and catering, logistics and transportation and cultural tourism as it closed all its tourist sites and upgraded risk levels for COVID-19 on July 30 after the city reported one confirmed locally transmitted COVID-19 case.

"More than 270,000 people are engaged in the tourism industry in Zhangjiajie. We lost much business as all the tourist sites were closed," said Yang Aiping, president of a travel agency in Zhangjiajie.

According to the local government, many of the travel agencies, hotels and homestays got support funds. "The series of policies tailored for us are really heart-warming," Yang said. "The local rural commercial bank also plans to grant a credit line of 100 yuan per person to companies based on the number of tourists they received, up to a maximum of 5 million yuan."

In the new policy, financial institutions will be encouraged to roll out bill discounts and standardized bill financing, and the People's Bank of China will provide support in the form of re-discount, to alleviate the pressure on micro, small, and medium-sized enterprises caused by payment arrears.

"The financial support is a solid help for companies in this tourist city. We are confident that tourism in Zhangjiajie will recover," Yang said.

BULLISH PROSPECTS

In the new policy, greater support will be provided for starting businesses and pursuing innovations.

"We need such new support. As a new high-tech company on energy control, it was hard for us to obtain bank loans. But now, we see the government's determination in supporting start-ups and helping us improve risk resistance," said Liu Hao, president of the Kangaroo (Tianjin) Carbon Neutral Research and Development Co., Ltd.

China said earlier this month that it will set up a stock exchange in Beijing and build it into a major base for innovative small and medium-sized firms.

"The Beijing Stock Exchange aims to serve innovative SMEs. The goal is to provide them with more convenient and inclusive financing and service platform and cultivate a batch of key innovative SMEs. The new policy will bring better development paths for SMEs after getting out of the current difficulties," Liang said.

"Where there are enterprises, there are jobs. The new policy will reduce the burdens of the micro, small and medium-sized companies and enhance job opportunities," said Li Jianming, vice president of the China Enterprise Confederation.

"Meanwhile, the enterprises also need to make good use of the new policy, improve their management and expand the markets to create more competitive services and products, and explore more growth potential," Li said.