Authorities in Zhejiang province will provide more fiscal and policy support for SMEs and the private sector in a bid to counter the effects of the financial crisis, a senior official said yesterday.
Taxes and fees on private firms will be cut by 50 billion yuan ($7.3 billion) this year, Li Zhihai, head of the provincial development and reform commission, told China Daily.
One of the first provinces to adopt reform and opening-up policies in the early 1980s, Zhejiang province is home to more than 520,000 private firms, which account for 74 percent of all its businesses.
However, the financial crisis has hit demand for the province's exports, which grew by just 13.3 percent year-on-year in the first three quarters of last year, 10.4 percentage points lower than in the equivalent period of 2007.
Small firms have also been hit hard. In the first nine months of last year, their losses increased by 62 percent year-on-year, 20 percentage points higher than in 2007, according to commission figures.
"We will set aside 350 million yuan this year and next to help small and private exporters tap overseas markets," Li said.
Zhejiang's exports to the United States and Europe, its key markets, have slumped due to the financial crisis, so the government will help exporters find alternatives, he said.
In the first nine months of last year, exports to Southeast Asia, Latin America, Africa, and the Middle East rose significantly, he said.
"So these will be our new focus," Li said.
The provincial government will also allocate about 2 billion yuan a year to support the transfer of production facilities to inland provinces, as well as improving their research and development capabilities, he said.
"Land and labor costs are rising, which is not good for local firms," he said, adding that the government will provide financial support to encourage local firms to update their technologies and expand their sales networks.
"The first half of this year will prove the hardest time for Zhejiang firms, as the global financial crisis gets worse," he said.
"There will be much uncertainty for exporters and the economy."
(China Daily January 15, 2009)