Zhejiang’s new industries are in the same situation. For the LED lighting industry, since September last year the number of Zhejiang LED companies has increased from 16 to about 180, and this number is still growing.
Due to a lack of understanding of this new industry, the products of domestic LED lighting factories are considered low-end products. This results in excess capacity, with many manufacturing companies falling into troubles.
Chinese traditional manufacturing has not recovered from the international financial crisis, and more serious conditions include limited electricity, lack of employment, limited bank loans and rising costs of capital goods. Some cash-strapped small and medium-sized enterprises (SMEs) fall into the trap of usury.
“In order to fundamentally solve this problem, domestic banks should stop their monopoly and go with structural adjustment,” he said. He also said that the current cost of financing for SMEs is up to 20 percent or more, while for most state-owned enterprises, the ratio is merely 5 percent.
The uneven distribution is rooted in financing costs, and Long urged the government to help with the development of the labor manufacturing industry on tax policies. He indicated that, if the government does not benefit from the increased employment from the manufacturing industry, the owners of this industry will surely give up.
Long emphasized this point to convince the central and local governments that China still has a chance to avoid the mistakes that will cause a financial crisis.
