China reiterates financial support for small businesses

BEIJING - China's cabinet on Monday unveiled details of financial support for the cash-strapped small businesses which play a key role in growth and employment.

Credit growth to small enterprises should not be lower than total credit growth. The incremental amount should not be less than that recorded a year earlier, read a statement by the State Council.

Village banks, credit companies and other small financial institutions are encouraged to set up branches in areas where small businesses are concentrated.

Private banks, financial leasing companies and consumer financial companies are also encouraged to set up in those areas.

"Private capital should have easy access to the finance industry. Small financial institutions can provide effective services and promote fair competition," the statement noted.

With the economy slowing for several quarters, the government is looking to small businesses to stabilize growth and employment.

In late July, a move was announced to suspend value-added tax and turnover tax for businesses with monthly revenues below 20,000 yuan ($3,270) from August 1.

According to the Ministry of Industry and Information Technology, 99 percent of companies registered in China are small or medium enterprises. They provide up to 80 percent of urban jobs and 60 percent of economic output.