$238 BILLION
Growth in new loans for micro and small enterprises in 2022
million yuan ($222,750). This is quite helpful, and it comes at the perfect moment,” Deng Fei, the company’s Manager, told Guangming Daily. Since April, a growing number of businesses have got the refund, which provided respite from cash flow constraints.
Other support measures are also in place. For a limited time, small taxpayers are excused from paying VAT. On the other hand, enterprises with due yearly corporate income tax between 1 million and 3 million yuan ($148,800 and $446,400) could just pay half of the tax.
Fan Cheng, Head of Sichuan Yibin Lifeng Building Materials, told People’s Daily that his company’s tax payment for the fourth quarter of last year was deferred until June and the 250,000 yuan ($37,125) previously paid was returned to the company’s account in March. For April, May and June, the company also benefited from deferred tax. “In the past two years, we have significantly increased our investment in research and development to improve the quality of our building materials and expand the market. As a result, we are short of funds right now,” he continued. According to Fan, this time the company has used all of this deferred tax to improve its manufacturing process, allowing it to raise its revenue.
“Facts have proven that the policy of tax and fee reduction is a direct and effective way to help enterprises overcome their difficulties, and is a powerful measure to support the development of technology enterprises and attract talents,” Zhu Jiandi, Chairman of Shu Lun Pan CPAS, told Chinafrica.
The State Council’s State-owned Assets Supervision and Administration Commission published a statement at the end of May, outlining assistance measures such as rent reduction or exemption, favorable power prices, and a 10-percent price reduction on broadband network use. Restaurants, retail, tourism, road, river and railway transportation, civil aviation, and other industries experiencing particular problems will benefit from these favorable measures. Guangdong Province provided subsidies to the restaurant industry for expenditures related to pandemic prevention, while Shandong Province indicated that more than half of the assistance may be granted without a formal application.
“In general, the relief policies and measures are gradually being implemented, with a positive result,” said Meng Wei, Spokesman for the National Development and Reform Commission.
Easier financing
This year’s Report on the Work of the Government indicates that liquidity will have to be maintained at a reasonably abundant level, with the aim of reducing the cost of financing for enterprises. According to a State Council meeting in early May, financial support for MSMES will be strengthened. This year, major state banks will add 1.6 trillion yuan ($238 billion) in new loans for micro and small enterprises.
Chen Yewen, Head of Xinchang Great Wall Air Conditioning Parts Co. Ltd., is relieved that a sum of 18 million yuan ($2.7 million) has been transferred to the company. The company’s turnover has decreased this year as a result of the COVID-19 pandemic, and there is greater pressure to make repayments for bank loans. After verifying the facts, the Agricultural Bank of China’s Xinchang District Branch in Zhejiang Province quickly provided a loan to the firm, resolving its dilemma.
On April 19, the First-loan Center opened in Xianning, Hubei Province, to better serve businesses. The center, which is supported by the Xianning Branch of the People’s Bank of China, intends to satisfy the first-loan demand of micro and small enterprises in order to simplify their financing in the present situation.
Adequate cash flow is the foundation for the smooth operation of MSMES. According to the China Banking and Insurance Regulatory Commission, at the end of April, outstanding bank loans to micro and small enterprises reached 53.54 trillion yuan ($7.95 trillion) nationwide, up 21.64 percent year on year.
Insurance also plays a crucial role in assisting MSMES in dealing with hazards. Experts believe that insurance services should be enhanced to meet the needs of each business. Enterprises should be covered for asset losses resulting from work and production halts owing to the pandemic outbreak, as well as income losses resulting from business disruption, among other things.