China amplifies support to boost SMEs and accelerate innovation

China is intensifying its support for small and medium-sized enterprises (SMEs) as part of its broader strategy to spur the country's economy, drive innovation and enhance the capabilities of SMEs.

Specific measures have been announced to promote the growth of innovative SMEs, "little giant" firms, which are highly specialized SMEs focusing on niche markets with advanced technologies, and unicorn companies. According to the Ministry of Industry and Information Technology (MIIT), the support will target technological breakthroughs, digital transformation, financing and international cooperation.

Central government funds will be allocated to aid innovative SMEs and "little giant" firms in developing products, strengthening the supply chain and driving innovation. Meanwhile, unicorn companies will receive assistance with public listings, mergers and acquisitions, restructuring, and exploring emerging fields like brain-computer interfaces and 6G technology.

"These firms play a vital role in fostering new, high-quality productive forces," said Wang Jiangping, vice minister at MIIT. "We will focus on helping these enterprises expand their markets and unleash their full potential."

So far, China has cultivated around 141,000 innovative SMEs, including 14,600 "little giant" firms, MIIT data shows. In the first eight months of this year, SMEs above a designated size recorded steady growth, with a 7.1-percent year-on-year increase in value added. SMEs in 19 of the 31 major manufacturing sectors reported a rise in total profits, including a 34.2-percent growth in automobile manufacturing and 18.7 percent in the textile sector.

At an auto parts manufacturer in Zhengzhou, Henan Province, a car seat is produced every 90 seconds. During the first eight months of this year, the company saw an 80-percent year-on-year increase in orders, with profits doubling over the same period.

"We've applied environmentally friendly materials and implemented a flexible production line design, continuously improving efficiency and boosting profits," said Song Xiaomin, an executive at Zhengzhou Faurecia Automotive Parts Co., Ltd. "By the end of this year, we plan to add two more production lines."

Zhang Zhongyong, director of the Small and Medium Enterprises Research Center at the China Academy of Information and Communications Technology, noted that the recent policy measures have created substantial opportunities for the growth of small and medium-sized enterprises.

"Expectations for sectors such as automobile manufacturing and textiles continue to improve, and many SMEs are positioning themselves to move up the value chain," he said.

Financial support for SMEs expanding access

To support SMEs' financial needs, China is also introducing financing initiatives. Financial institutions are being encouraged to consider factors like quality management and brand reputation when evaluating loan applications, a move intended to improve access to capital.

The government also promotes equity financing, funds and bonds to diversify financing channels. The policy of loan renewal without principal repayment, which previously applied only to micro and small enterprises, will gradually expand to include medium-sized enterprises.

Hu Dongchen, co-founder and CFO of Syi Tsing Energy Tech, a start-up specializing in software and hardware solutions for energy storage networks, emphasized that implementing principal-free loan renewal policies could greatly benefit their operations.

"It takes time for national policies to be issued and implemented by banks, but if the policy of loan renewal without principal repayment is fully realized, it will directly support the company operations," Hu told CGTN. The company, which is exploring green energy initiatives, particularly values the stability and consistency in policies and regulations.

"We hope that legal protections for the non-public economy can be effectively implemented," added Hu. "Stability and consistency in policies, laws and regulations are also crucial for us."

Last week, the government issued guidelines to address payment arrears on government-funded projects, helping SMEs avoid liquidity issues. A national platform has been established for SMEs to report complaints, with mechanisms in place to penalize bad faith actions by project participants.

Zhang Wen, president of the Beijing Financial Court, emphasized supporting SMEs through regulatory, industrial and judicial cooperation.

"Technology companies make up a significant proportion of SMEs. Their growth often demands high investments, extended timelines and comes with considerable risk and uncertainty," Zhang Wen said.

"And they still largely rely on indirect financing methods, such as bank loans, making it difficult and costly for them to access necessary funds. This highlights the need to broaden financing channels for SMEs to better support their growth and innovation," she added.

Zhang Qicheng, chairman of Caitong Securities Co. Ltd., spoke on the importance of making policies comprehensible and actionable for enterprises.

"Policies need to be transformed into standardized, integrated and user-friendly guides that businesses can follow effectively," he said. "Our focus should be on providing comprehensive financial services, supporting SMEs through their full lifecycle."