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Amid challenges, small enterprises benefiting from policies

China Daily| Updated: June 10, 2022 L M S

As the COVID-19 situation continues to evolve and global prices for bulk commodities remain high, many of China's micro, small and medium-sized enterprises are dealing with mounting challenges.

One of the most pressing issues facing the smaller business community is the cash flow crunch. A new guideline, issued by the Ministry of Industry and Information Technology in May, specifically tackles this problem.

Under the guideline, large State-owned banks will add over 1.6 trillion yuan ($240 billion) in inclusive loans to MSMEs.

Banks have been directed to renew loans, extend and adjust repayment arrangements and waive interest for MSMEs and self-employed households where appropriate, and credit scores should not be affected.

State guaranty funds and guaranty institutions set up by the government will be expanded to cover more MSMEs and self-employed households.

"Serving the real economy is the primary responsibility of financial institutions," said Mao Hongjun, an official from the Department of Financial Inclusion at the China Banking and Insurance Regulatory Commission. "For some areas that have been hit particularly hard by outbreaks, local SMEs have ceased operations for quite some time and are in a precarious position. Helping them cope with short-term shocks can help keep their overall economic performance stable and, in essence, ensure credit quality."

In step with the new guideline, the Ministry of Finance has also urged faster refunds of value-added tax credit to businesses, and has expanded refund policies to cover more industries. For example, all outstanding VAT credits must be refunded to SMEs and self-employed households by June 30.

While some businesses are looking for more of a helping hand, others have benefited from the raft of supportive policies implemented by the central government, including the VAT policy.

Huang Jinwen, manager of a small manufacturing company that mainly produces LED lights for automobiles in Ningbo, Zhejiang province, said that for his company, the new VAT credit refund policy is both timely and helpful.

He said the evolving COVID-19 situation has slowed the collection of payments, placing financial pressure on operations. Meanwhile, as the company endeavors to expand production this year, its need for funding has become more acute.

"This year, we are able to enjoy the central government's tax and fee reduction policies and have so far had some 262,000 yuan in cooperative tax deducted. Such a sum is of great help at this unusually challenging time," he said. "In addition, we will also be able to enjoy a tax refund of about 20,000 yuan in the first half of this year, thanks to the tax refund policies."