Despite headwinds, private economy more confident with 3-month streak

China's small and medium-sized enterprise development index edged up 0.1 point to 89.4 in August, reflecting continued recovery momentum in the sector thanks to strengthening policy support for the private economy and investment.

The China Association of Small and Medium Enterprises said on Monday that the index, generated based on the performance and expectations of 3,000 SMEs, marked a three-month rising streak.

Specifically, subindexes for the industrial, transportation and storage, wholesale and retail, and social services as well as accommodation and catering sectors saw a rebound last month. The subindex for the industrial sector, in particular, has risen for three consecutive months, with figures for production and domestic and overseas orders both soaring.

Hua Jiansheng, deputy general manager of Dongguan Yihong Precision Technology Co Ltd — a type-C connector provider from Guangdong province — said sales of its products saw an apparent increase from June to August, with August exceeding its best month last year.

The small company, with less than 50 employees, produces 300,000 type-C connectors per day. Its clients include big names like Japanese gaming giant Nintendo and Chinese smartphone company Xiaomi Corp.

"Our rebounding operations and performance are mainly thanks to the recovering consumption demand for electronics and the overall macroeconomic environment," Hua said.

Similar growth has been seen at Shuidi Credit, a credit evaluation service provider from Shanghai. On average, its business revenue soared more than 30 percent year-on-year over the past months.

Yang Maojiang, general manager of Shuidi Credit, said most of the companies it serves have shown strengthening confidence in their operations as well as future growth.

Such confidence was reflected in the subindex gauging sentiment towards the macroeconomy, market and operations, which edged up 0.3 point, 0.2 point and 0.1 point, respectively, compared with last month, said the China Association of Small and Medium Enterprises.

Ma Bin, executive vice-president of the association, said, "The confidence of SMEs continues to be boosted as China launched a series of guidelines to promote the development and growth of private enterprises, along with a series of fiscal, taxation and financial policies to support the real economy and activate the capital market."

In China, SMEs are responsible for nearly 50 percent of the nation's tax revenue and 60 percent of GDP.They also contribute to 70 percent of the nation's technology innovation and 80 percent of urban employment.

The association, however, also cautioned about challenges facing SMEs, including external economic uncertainties and high corporate costs, calling for further expanding effective demand and improving the business environment.