China considers amending law to boost small, medium-sized firms

China’s top legislature is considering amending a 2003 law that supports small and medium-sized businesses, according to a statement released Monday.

The revised draft was submitted to legislators for its first reading at the bimonthly session of the National People’s Congress (NPC) Standing Committee, which began Monday and will run until Nov. 7.

According to the statement, released by the NPC Financial and Economic Affairs Committee, the law has helped boost growth in the small and medium-sized business sector.

By the end of 2015, the majority of the country’s 21.9 million registered enterprises were small and medium-sized businesses, according to government data. In industry, for example, small and medium-sized businesses accounted for about 99.6 percent of all firms.

However, the statement pointed out that the current law is not specific about supporting policies and not easy to implement.

In order to create a better legal environment for small and medium-sized firms, especially small and micro-businesses, to grow, the current law should be revised, it said.

Small and medium-sized businesses, most of which lag behind in technology and with risk management, have felt the pinch from downward pressure in the economy in recent years, according to the statement.

It added that increased production costs and contracted profits were threatening the survival and development of such businesses.


According to an online survey conducted by the group which drafted the revision in 2014, about 43 percent of respondents said they had difficulties in financing.

A report produced by the group said small and micro-sized firms found it difficult to get loans because most of them lacked mortgages that were recognized by banks.

Even if they could obtain loans, procedures were complicated and time-consuming, according to the report.

Meanwhile, many small and medium-sized firms were troubled by employment issues, including difficulties in recruiting skilled workers and rising labor costs.

In addition, multiple taxes and fees, and disturbances from government authorities, including various examinations and meetings, were also among factors hindering such businesses, the report said.

According to the report, a total of 18 departments are collecting fees from small and medium-sized firms. In one case, a firm in Guangdong Province said it had to pay about 6 million yuan (about 886,000 U.S. dollars) in taxes and fees each year, while its net profit only stood at 1 million.


Defining the boosting of growth in small and medium-sized firms as a long-term development strategy, the revised draft aims to realize equal rights, rules and opportunities for all firms.

“The nation will proactively support small and medium-sized firms, especially small and micro-businesses, ” it said, adding that efforts would be made to help them grow in a healthy way.

The draft offers favored tax policies to lower the burden on small and micro-businesses.

It also aims to stimulate financial institutions to work effectively and fairly for such businesses.

An array of measures are laid out in the draft, including expanding the scale of financing for small and micro-businesses and providing financial services catering to such businesses.

The draft states that the value of products bought from small and medium-sized firms should account for at least 30 percent of the total annual government procurement budget.

Efforts should be made to improve procedural transparency and efficiency when small and medium-sized firms seek to protect their rights, according to the draft.

It also allows small and medium-sized firms to claim compensation for delays in payments from large enterprises.

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