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Premier: Financing cost reductions for small enterprises guaranteed

Updated: Mar 31,2018 10:54 AM

At the March 28 State Council executive meeting presided over by Premier Li Keqiang, two themes involved reducing burdens for small and micro-sized enterprises.

Among the decided measures to deepen value-added tax reform, the unified standard for small-scale taxpayers helps more enterprises benefit from the lower tax rate. Also, the establishment of the state financing guarantee fund aims to solve financing problems for small and micro-sized enterprises, agriculture, rural areas and farmers.

Six times during the meeting, Premier Li mentioned cutting financing costs for small and micro-sized enterprises. He said, “I am concerned a lot about one thing this year — that is to solve the financing problems for small and micro-sized enterprises. The finance sector should innovate mechanisms and modes, and truly implement policies to reduce financing costs for small and micro-sized enterprises.”

Implementing the Government Work Report to promote inclusive financing and to better serve the real economy, the meeting decided that a national financing guarantee fund will be initiated by the central government in collaboration with financial institutions.

With an initial amount of no less than 60 billion yuan, the fund will support provinces, autonomous regions and municipalities to provide financing guarantees in the form of equity investments and re-guarantees. These financing guarantees will support small and micro-sized enterprises, agriculture, rural areas, farmers, entrepreneurship and innovation. Meanwhile, this will enhance construction of a social credit system. The funds will be supported by the government and operated according to a market orientation.

Premier Li stressed: “We need to check whether the financing costs for small and micro-sized enterprises are truly reduced. The results shall be examined by a third party.”

By supporting the development of small and micro-sized businesses, we are actually creating jobs, said the Premier.

China still faces big employment pressure this year. There are 8.2 million college graduates, the highest number on record. That’s in addition to the almost 5 million graduates from secondary vocational schools, and the nearly 1 million demobilized military personnel and workers laid off in cutting overcapacity. “We must make every effort to ensure their employment by expanding employment channels, promoting mass entrepreneurship and innovation, and supporting the growth of small and micro-sized enterprises,” said Premier Li.

According to preliminary estimates, in the next three years, this fund will add about 500 billion yuan of guaranteed loans, or one-quarter of the nation’s total business in financing guarantees, which will effectively ease financial difficulties for small and micro-sized businesses and the agricultural sector.

The Premier urged related departments to press ahead with implementation of the fund and introduce supporting policy measures. Currently, all of the five State-owned commercial banks have set up inclusive finance departments, said Premier Li. The key for them is to play their roles. The healthy development of small and micro-sized businesses will guarantee the growth of employment and social wealth, allowing society to become more harmonious and stable, he added.