In a significant move to bolster the backbone of its economy, China is rolling out a series of financial initiatives aimed at supporting small and medium-sized enterprises (SMEs). These measures are designed to enhance access to finance, reduce liquidity pressures, and stimulate innovation across various sectors.
Recently, a mechanical manufacturing company in Anhui Province applied for a loan renewal as its current loan approached maturity. By opting for deferred principal repayment, the company was able to ease short-term liquidity pressures and focus on its operations instead of immediate repayment concerns.
\"The loan renewal terms, including the interest rate and repayment structure, are relatively flexible,\" said Zhang Jinzhi, the company's representative. \"When our loan was about to expire, we applied for an extension with deferred principal repayment, which alleviated our liquidity pressures.\"
These loan renewal measures are part of a broader national strategy to support SMEs in China. The government has introduced various initiatives this year to ease the financial burden on businesses, with principal-deferral loan renewal being one of the most widely supported. Initially targeted at micro-enterprises, this policy has been expanded to include small and medium-sized businesses, helping them maintain operations during challenging periods.
In addition to loan renewals, the government has launched other financial support measures, including a 100 billion yuan (about $13.8 billion) re-loan scheme aimed at startups and tech-focused SMEs. Financial institutions are encouraged to reduce service fees for smaller businesses while offering more flexible repayment terms. By September 2024, the total loan balance for small and micro-businesses had increased by 2.2 trillion yuan across major commercial banks.
\"Though it takes time for national policies to be implemented by banks, the option for loan extension with deferred principal repayment directly supports our operations,\" said Hu Dongchen, co-founder and CFO of Syi Tsing Energy Tech. His start-up, focused on software and hardware solutions for energy storage networks, values the stability and consistency provided by these policies.
These initiatives not only provide immediate financial relief but also foster an environment where SMEs can thrive and innovate, contributing to China's long-term economic growth.
Reference(s):
China's initiatives for SMEs boost access to finance, fuel innovation
cgtn.com
