Several Measures on Strengthening Support and Relief for MSMEs issued by Office of the Leading Group on SME Development of the State Council

Introduction 

The State Council’s leading group on the development of small and medium-sized enterprises has recently issued a document titled Several Measures on Strengthening Support and Relief for Micro, Small and Medium-sized Enterprises. The document laid out ten measures to assist MSMEs in their stable and healthy development, including urging local authorities to allocate special relief funds to help MSMEs and individual businesses, asking state-owned large commercial banks to grant 1.6 trillion yuan of new inclusive loans to small and micro businesses in 2022, and launching a special action to prevent and resolve overdues to SMEs.

Several Measures on Strengthening Support and Relief for MSMEs

The MSMEs are an important component of national economic and social development, the key market entities, a mainstay for ensuring employment, and a critical link in enhancing the stability and competitiveness of the industry chain and supply chain. Amid the aggravated complexity and uncertainty of the external environment, frequent outbursts of COVID-19 cases at home, and many other factors recently, market entities, especially MSMEs, have encountered growing difficulties in their production and operation. Strong and urgent measures must be adopted to help them wade through this tough period and achieve stable and heathy development. The following measures are therefore formulated:

I. Local authorities should allocate a special relief fund to MSMEs and individual businesses and optimize the outlay structure. They should provide more support for MSMEs and individual businesses whose production and operation has been hit hard by the pandemic by, in consideration of local conditions, offering subsidies for housing rent, water and electricity bills, guarantee fees, anti-pandemic expenditure, etc. and by granting subsidized loans and social security subsidies. 

II. In 2022, state-owned large commercial banks should strive to increase the inclusive loans to small and micro businesses by 1.6 trillion yuan. In light of their own risk management capability and the borrowers’ actual conditions, the banks shall support MSMEs and individual businesses that have good prospects despite temporary pandemic-induced difficulties by renewing or rolling over their debts or adjusting the repayment arrangements, and avoid withdrawing undue loans or cutting off loans. For MSMEs and individual businesses located in municipal administrative regions designated as high- or medium- risk in 2022 and engaged in catering, retail, culture, tourism, transport, manufacturing and other cash-strapped sectors, if banks are rolling over their debts or adjusting the repayment arrangement for their inclusive loans due by the end of 2022, the banks shall base their decisions on substantive risks rather than downgrade their risk category on the grounds of the pandemic alone, keep their credit record untarnished, and exempt them from default interests. More efforts must be made to increase the tolerance for small and micro businesses’ non-performing loans (NPL) and conduct due diligence and liability disclaimer on them. Banks are bolstered to step up the transfer, disposal and writing-off of NPL in compliance with rules. A national integrated financing credit service platform will be developed to share the credit information of enterprises concerned and enlarge the credit for MSMEs.

III. Government-backed financing guarantee agencies shall be brought into full play to provide more services for MSMEs and individual businesses, particularly those engaged in industries severely hit by the pandemic. The risk-sharing mechanism between banks and guarantee agencies must be further implemented. National financing guarantee funds and provincial financing re-guarantee agencies shall provide more re-guarantee services for MSMEs and individual businesses, and perform, in accordance with the law and the contract, their obligation of repaying the loans on behalf of MSMEs and individual businesses who are indeed incapable of repayment. 

IV. Steps shall be taken to support banks in providing exchange rate risk aversion services and support futures companies in providing risk management services for MSMEs. Policy-based export credit insurance will be applied in a wider scope, short-term premium rate will be lowered in a targeted way, and conditions for claim settlement will be refined as part of the efforts to further support foreign trade MSMEs. Insurance agencies are encouraged to diversify their product portfolio in view of MSMEs’ risk characteristics and insurance needs.

V. A special action will be launched to prevent and resolve overdues to MSMEs. Great efforts shall be made to deal with existing overdues, so that undisputed overdues will all be cleared, a definite payment plan is made for overdues of which the payment is indeed difficult at the moment, and disputed overdues will be resolved more quickly either through consultation or by legal means. Malicious delay in paying MSMEs or setting obviously unreasonable conditions and term of payment in the contract must be rectified with stronger measures. A special action will also be carried out against illegal charges on enterprises, for which a coordinated governance and joint punishment mechanism will be established, to regulate the charging activity, intensify social and public supervision, and resolutely identify and punish arbitrary charging, fining, and apportioning. 

VI. Efforts must be made to ensure the supply of bulk materials at a stable price. A raft of approaches including storage will be used to better regulate supply and demand and keep the price stable. The spot and futures market of bulk goods shall be supervised more closely, and collusive price hike, bull campaign and other actions against the law and regulations shall be severely combated to maintain price and order in the market. Localities with the right conditions are encouraged to offer periodic preferential electricity rates for small, micro and individual businesses, and those that have temporary difficulties in production and operation due to the pandemic shall be given a six-month grace period on their unpaid water, electricity and gas bills. Policy measures must be released to reduce or combine port charge items and lower pilotage dues at specific coastal ports. 

VII. More efforts shall be made to guarantee the supply of productive factors. MSMEs at critical links of the industry chain shall be put on the “white list” of key industry chains and supply chains, and relevant parties shall be coordinated more effectively to solve prominent issues impeding the resumption of production – employees cannot get to plants and transportation of materials faces too many restrictions, for instance. A “hand in hand” action will be rolled out to urge big, medium-sized and small enterprises to intensify cooperation in innovation, exert leading companies’ exemplary role and MSMEs’ supportive capacity, and help upstream and downstream MSMEs along the industry chain resume production in a coordinated way. Local authorities must wield a combination of policies to ensure a safe and stable industry chain and supply chain for MSMEs, put in place a coordination mechanism to meet their personnel and logistics demand, and guide them to stabilize production and operation through close-loop management and enclosed operation provided all anti-pandemic measures are strictly implemented. 

VIII. The average broadband and dedicated network fees for MSMEs shall be reduced by another 10% in 2022. Stronger actions must be taken to train manufacturing MSMEs to go digital and identify their bottlenecks and difficulties in doing that. Large enterprises are encouraged to build cloud platforms and MSMEs to use them to obtain resources and application services. Digital service providers are encouraged to reduce or exempt the cloud platform fees for pandemic-hit MSMEs, and more support will be given in that area by fostering strong and capable digital service platforms. 

IX. Selling green and intelligent household appliances and green building materials in the countryside and building farmers’ markets where agricultural products are produced are encouraged. Cities are strongly supported to carry out pilot and demonstrative projects of public vehicle electrification to boost market demand. 

X. The SME service action and SME service month event shall be carried out in depth. All kinds of quality service resources will be gathered and directed to enterprises, industrial parks, and business clusters to understand the difficulties and appeals of MSMEs and help them reduce cost and improve efficiency. Local governments are encouraged to appoint “enterprise butlers” and “enterprise service liaisons” to visit enterprises to learn about their difficulties and needs, and work out differentiated and targeted measures to help each of them. Public SME service platforms and entrepreneurship and innovation bases for small and micro businesses should be brought into full play. Digitalized policy service platforms such as the “SME Assistance & Inquiry” APP shall be improved to provide enterprises with authoritative policy interpretations and customized policy services, clearing the last mile of policy implementation. A national inspection will be conducted on the progress on lessening enterprises’ burdens and promoting SME development, so that policies are effectively put into practice through faithful discharge of responsibilities and removal of choke points. 

All localities and departments shall align their thinking and action with the decisions and deployments made by the CPC Central Committee and the State Council. The working mechanisms on all levels of promoting SME development shall be fully implemented, and relief measures must be further detailed based on realities to maximize the effect of relevant policies. We must more closely monitor, analyze and study business operation, pay close attention to MSMEs’ developing dynamics, and bring entrepreneurs onboard in formulating policies concerning enterprises. A comprehensive and coordinated working mechanism should be established to enhance organization, leadership and overall coordination and form synergy in helping enterprises out of the straits. Progress on the work shall be reported to the Office of State Council’s Leading Group on SME Development in a timely manner.