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CHINA> National
China promises aid to small businesses
(Agencies)
Updated: 2009-08-19 22:33

BEIJING: China promised tax breaks and other aid Wednesday to help small businesses get through the economic slump, a possible lifeline to entrepreneurs who have struggled while its huge stimulus went to state companies.

A Cabinet statement promised help to improve technology and boost exports in industries including appliances and autos. It gave no details but said troubled companies would be allowed to reduce or postpone paying taxes for social welfare programs for employees.

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The measure could help private companies that produce up to two-thirds of China's economic output and most of its new jobs but have lagged as Beijing rolled out its 4 trillion yuan ($586 billion) stimulus. The plan is based on building highways and other public works and channeled the bulk of the money through state-owned construction, steel and cement companies.

"Promoting the development of small and medium-size enterprises is an important foundation for promoting the stable and relatively fast growth of the people's economy," the Cabinet statement said.

Boosted by the stimulus, China's economic growth accelerated to 7.9 percent in the latest quarter, up from 6.1 percent the previous quarter. But growth in retail sales and other private sector activity has been slower to recover, and economists and the government say continued improvement depends on more stimulus spending.

China's bank regulator said in February that lenders were ordered to help small companies survive, but it is unclear what they have done.

Wednesday's statement made no mention of state or private industry, but all of China's private companies are smaller. Some private manufacturers have benefited from state subsidies for appliance purchases in the poor countryside and for encouraging sales of more fuel-efficient automobiles.

Beijing previously announced aid plans for 10 fields including steelmaking and shipbuilding but most targeted government-dominated industries.

 

 

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