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Saturday 29 November 2008
Stimulus Package Cold Comfort for Small Firms
Small businesses are facing a tough winter, helped only a little by the government’s 4 trillion yuan (HK$4.54 trillion) stimulus package, Li Zibin, chairman of the China Association of Small and Medium Enterprises, said.
Small businesses are facing a tough winter, helped only a little by the government’s 4 trillion yuan (HK$4.54 trillion) stimulus package, Li Zibin, chairman of the China Association of Small and Medium Enterprises, said.
More small and medium-sized companies would shut down as the economy slowed further, Mr. Li said yesterday. Businesses faced a funding drought.
Small and medium-sized businesses account for more than 60 per cent of the mainland’s gross domestic product and 75 per cent of urban jobs, the government says. Waning export demand and a slowing economy are triggering bankruptcies and protests at job losses, raising the risk of social unrest.
The government has announced a package to stimulate growth, including spending on housing and infrastructure, and has reiterated it wants banks to boost lending to smaller businesses.
While the plan would help smaller businesses by boosting domestic demand, it was not certain that efforts to encourage lending would succeed, Mr. Li said.
Companies were still being hurt by the lagged effect of government measures last year to tighten lending to counter inflation, he said.
Banks might prefer to lend to risk-free infrastructure projects rather than small companies, UBS economist Wang Tao said this month.
The worst global financial crisis since the Depression has cut demand for Chinese products, and a slump in construction is also a drag on the economy.
Small firms faced tough times, said Mr. Li, whose organisation claimed 76,000 members in the first half of this year. About 65 per cent of small toymakers closed in the first nine months, customs data showed.
GDP expanded at the weakest pace in five years in the third quarter, and the slowdown is deepening, according to the government, which yesterday cited worsening economic indicators for this month.
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Stimulus Package Cold Comfort for Small Firms
Bloomberg in Beijing
29 November 2008
Small businesses are facing a tough winter, helped only a little by the government’s 4 trillion yuan (HK$4.54 trillion) stimulus package, Li Zibin, chairman of the China Association of Small and Medium Enterprises, said.
More small and medium-sized companies would shut down as the economy slowed further, Mr. Li said yesterday. Businesses faced a funding drought.
Small and medium-sized businesses account for more than 60 per cent of the mainland’s gross domestic product and 75 per cent of urban jobs, the government says. Waning export demand and a slowing economy are triggering bankruptcies and protests at job losses, raising the risk of social unrest.
The government has announced a package to stimulate growth, including spending on housing and infrastructure, and has reiterated it wants banks to boost lending to smaller businesses.
While the plan would help smaller businesses by boosting domestic demand, it was not certain that efforts to encourage lending would succeed, Mr. Li said.
Companies were still being hurt by the lagged effect of government measures last year to tighten lending to counter inflation, he said.
Banks might prefer to lend to risk-free infrastructure projects rather than small companies, UBS economist Wang Tao said this month.
The worst global financial crisis since the Depression has cut demand for Chinese products, and a slump in construction is also a drag on the economy.
Small firms faced tough times, said Mr. Li, whose organisation claimed 76,000 members in the first half of this year. About 65 per cent of small toymakers closed in the first nine months, customs data showed.
GDP expanded at the weakest pace in five years in the third quarter, and the slowdown is deepening, according to the government, which yesterday cited worsening economic indicators for this month.
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