China's SOEs to join support of SMEs affected by COVID-19
An elevator factory in Huzhou, Zhejiang Province, China, May 10, 2022. /CFP

An elevator factory in Huzhou, Zhejiang Province, China, May 10, 2022. /CFP

China has rolled out guidance for central State-Owned Enterprises (SOE) to help small and medium-sized enterprises (SMEs) relieve urgent needs amid the new wave of COVID-19, according to a statement on Wednesday.

Given that complexity and uncertainty at home and abroad have increased, many SMEs are facing prominent difficulties such as poor payment collection, high costs, and shortage of funds, said the statement by the State-owned Assets Supervision and Administration Commission of the State Council of China.

The guidance consists of 27 measures covering paying accounts, reducing or exempting rent, reducing costs, optimizing supply, and financing funds.

It requires SOEs to eliminate malicious arrears to SMEs, encouraging SOEs to pay in advance to in-difficulty SMEs, which has established long-term cooperation, poses good reputation, and fulfills contracts timely.  

The guidance urged SOEs to complete the reduction or exemption of three months rent for small and micro enterprises and small private businesses in the service industry in the first half of this year.

In order to help SMEs to reduce costs, the commission said it will cooperate with price and market regulators to prevent unreasonable price increases in power supply. It also called on SOEs to ensure the supply of energy and telecommunications service to SMEs in arrears, and allow them to repay within six months.

Moreover, the guidance encourages the financial subsidiaries of state-owned automobile enterprises to play a leading role in supporting SMEs, by providing a 6-month deferral of principal and interest repayment policy for commercial truck consumer loans issued before June 30, 2022. 

Millions of businesses across China have been forced to close down, or limit their activity, to help contain the spread of COVID-19. The Chinese government has recently ramped up efforts to help SMEs tide over difficulties. 

The Ministry Industry and Information Technology on May 18 vowed to offer subsidies for spending on rent, utilities, loan repayments and social security premiums for SMEs, which are facing difficulties in costs, financing and logistics.

In terms of financing support, China will guide large state-owned banks to offer 1.6 trillion yuan ($237.31 billion) of inclusive loans to micro and small firms this year, the China Banking and Insurance Regulatory Commission said last Wednesday.

Search Trends