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China's SME Development Index Rises for Third Straight Month in August

By Yicai|Sep 12,2023
A measure of the operational health of China's small and medium-sized businesses advanced in August for the third month running, buoyed by a series of policies to stabilize economic growth by boosting demand and slashing taxes and fees.

The China Small and Medium-Sized Enterprise Development Index edged up 0.1 point in August from a month earlier to 89.4, but still remained below the expansionary mark of 100, according to the results of a survey released by the China Association of Small and Medium Enterprises today. The index is calculated based on a poll of 3,000 SMEs.

The macroeconomic sentiment sub-index climbed 0.3 point last month from July to 99.1 and the market index edged up 0.2 point to 81.1. Both sub-indexes have gained for three consecutive months. The investment sub-index nudged up 0.1 point to 83.4, indicating that companies are more willing to invest as confidence grows and expectations recover.

But profit and revenue remain subdued due to weak demand and sliding prices. The business efficiency sub-index climbed 0.1 point to 74.4, but it is still at a low level.

The national economy continued to recover last month, indicating an overall upward tendency, the association said. However, the turnaround is mainly restorative, and the driving force of economic growth is not strong. The market lacks sufficient demand, market expectations are not stable and some companies are experiencing operational difficulties.

Hidden risks have accumulated, making it difficult to guarantee people’s livelihood, it added. Micro and small firms have been very hard hit, with orders dwindling and prices tumbling. There are difficulties in collecting accounts receivable and the environment for development urgently needs improving.

The Chinese government has been increasing its support for SMEs, which have been affected by a number of unexpected developments in recent years. Last year, more than 40 national-level policies were issued to underpin their development, and local governments released over 270 related documents, according to data issued by the Ministry of Industry and Information Technology.

In the near future, the MIIT will carry out nationwide supervision, aiming to relieve the burden on firms and boost growth. It will also push for the execution of policies that optimize the environment for SME development.


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