China's small companies warned of hard times ahead

(Xinhua)
Updated: 2008-10-28 14:52

BEIJING -- China Association of Small and Medium Enterprises president Li Zibin has called for greater government assistance in a warning to members that tough economic circumstances will begin to bite this month.

"The global financial crisis is set to affect the real world economy, including the Chinese economy, and small and medium-sized enterprises (SMEs) will bear the brunt," he said.

Li urged the government and SMEs to work together to deal with difficulties. "Small and medium-sized enterprises are playing an increasingly important role in creating more jobs and developing innovations," he said.

China's registered SMEs exceeded 4.3 million and contributed to almost 60 percent of GDP, 50 percent of tax revenues, 68 percent of exports and 75 percent of new jobs every year, he said.

SMEs, more than 95 percent of them privately owned, also made 66 percent of the country's patent applications and developed about 82 percent of its new products.

Since last year, many SMEs had faced operating pressures, including a credit squeeze due to stringent fiscal and monetary policies and rising export costs as the yuan continued to appreciate.

These pressures were continuing to build and the situation faced by many SMEs was even grimmer, Li said.

The government had come up with a series of measures to support SMEs, including the raising of export tax rebates, he said.