Small companies have concerns like higher raw material prices, labor costs

China will take a targeted approach to boost support for small and medium-sized enterprises amid downward pressure and uncertainties, officials said on Tuesday.

Xu Xiaolan, vice-minister of industry and information technology, said at a news conference in Beijing that the ministry will step up relief for SMEs and strive to foster innovation-driven development, especially for companies with high growth potential, advanced technologies and strong competitive positions.

Xu said that in light of the complicated and grim economic situation both at home and abroad, SMEs now face new problems and difficulties, including soaring raw material prices, insufficient orders, rising labor costs, high logistical costs and power shortages.

Looking ahead, Xu's ministry will work with relevant departments and local governments to better implement the recently released documents on boosting development and lessening burdens for SMEs, introduce supportive policies to help SMEs and closely monitor the operations of SMEs.

She said more efforts will also be made to cultivate more innovative, outstanding SMEs and overachieving small enterprises, giving full play to their role in enhancing the stability and competitiveness of industrial and supply chains.

Xu's remarks came shortly after the General Office of the State Council unveiled a notice to step up relief for SMEs. The new document requires taking nine targeted measures including increasing financing support, further cutting taxes and fees, flexibly using various financial policy tools and alleviating the pressure of rising costs for SMEs.

To lessen SME burdens, the State Council's leading group on the development of small and medium-sized enterprises also released two documents to cultivate more overachieving small enterprises, foster high-quality development of these companies and improve the competitiveness of SMEs.

Experts believe the new steps mark the nation's latest efforts to spur market entities' vitality and inject new impetus into the economy, which will also help strengthen industrial and supply chains.

Zou Lan, director of the People's Bank of China's financial market department, said the PBOC will also make a big push to tackle difficulties SMEs may face amid mounting uncertainties.

In the next stage, more efforts will be made to continuously deep－en supply-side structural reforms in the financial sector and guide financial institutions to invest more resources in key fields of the real economy, such as manufacturing, SMEs and green development.

The PBOC said China's financial institutions extended the repayment of principal and interest on loans of 11.8 trillion yuan ($185 billion) for small, medium-sized and micro businesses, from 2020 to October this year.

Dong Xiaoyu, a senior expert at Zhongguancun Development Group, said the current difficulties faced by SMEs are affected by multiple factors including soaring raw material prices and freight costs and the power crunch in some parts of the nation.

He said the government's new steps to boost support for SMEs will help solve problems for SMEs and foster sustainable and innovation-driven development in the long run.

Tang Dajie, a visiting fellow at Wuhan University in Hubei province, said government measures such as special loans as well as tax and fee reductions will mainly benefit large enterprises, and SMEs now face major challenges amid the COVID-19 pandemic and global economic downturn.

Tang suggested a targeted approach to tackle issues SMEs may face, including promoting digital transformation for SMEs and further reducing corporate social insurance premiums.