SMEs key to improving the business climate

Yuan Luhang
Rong Zhiqin, deputy director of the Shanghai Commission of Economy and Informatization, highlighted the importance of developing SMEs at a meeting on the city's business climate.
Yuan Luhang
SMEs key to improving the business climate

The development of small and medium-sized enterprises (SMEs) is key to the improvement of Shanghai's business climate, Rong Zhiqin, deputy director of Shanghai Commission of Economy and Informatization, said on Thursday.

Rong told a meeting that SMEs play an important role in creating jobs and boosting the economy but constantly faced difficulties in financing, which restricted their development.

So far, the scale of credit loan for SMEs is generally small and the main channels of financing for them are mortgage loans and loans with financing security, which leaves a huge space for the city to improve the business climate in credit loans.

This is getting more and more acute this year when the costs of most SMEs are soaring due to the pandemic, which has stronger demand for financing.

According to a commission survey, 74 percent SMEs are burdened by paying employees, 47 percent faced higher costs due to pandemic and 31 percent have likely to pay for breaking contracts.

Only 10 percent of SMEs got loans among the 1,680 companies surveyed that had financing needs. The threshold for getting credit loans is still high and interest rates are high.

But the situation will improve as the commission is focusing on solving the financing difficulty for SMEs by delaying capital repayment with interest, promoting credit loans and establishing a financing security system.

Shanghai’s Regulations on Promoting the Development of SMEs, which will provide more legal protection for SMEs, will be rolled out soon.

Last year, China ranked 31st for business climate measured by the World Bank. Shanghai accounts for 55 percent of weighting in the measurement.

Despite the pandemic, Shanghai is accelerating the improvement of its business climate. On April 10, the city began to implement the Shanghai Regulations on Improving Business Climate.

Xiao Guiyu, deputy director of the standing committee of the Shanghai People’s Congress, said that their implementation and approval within the same year, which is rare, reflects Shanghai’s resolution to improve its business climate.

He said that one important thing in improving the business climate is to change the role of the government, which means it should serve business rather than supervise. 

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