China will set up a special fund of 60 billion yuan ($9.4 billion) to support small and medium-size enterprises (SMEs), the Chinese cabinet said on Tuesday.
“The national SME development fund aims to alleviate financing difficulties for the SMEs and intensify the efforts to promote mass entrepreneurship and innovation and create new growth momentum,” said a statement released after an executive meeting of the Chinese Cabinet or State Council, presided over by Premier Li Keqiang.
The fund will focus on firms in early stages of their development.
Credit conditions have remained tight for SMEs, despite a series of policy easing, as banks avoid the companies worst hit by an economic slowdown.
State-owned banks have also avoided customers such as farmers and smaller businesses because of the difficulties in assessing their credit worthiness and they have little to offer as collateral.
China has expanded preferential tax policies for small companies and reduced their tax burden to boost economic growth and employment, as nearly 80 per cent of urban jobs are provided by small companies.
Preferential tax policies have helped Chinese small and micro firms save around 48.63 billion yuan ($7.95 billion) in the first half of 2015, according to figures put out by the State Administration of Taxes.
TBP and Agencies