Bloomberg:
I have a question about your support measures for small and medium-sized enterprises. What actually will you be doing to help small companies in China deal with both the supply shocks that they can't get what they need, and demand shocks that they can't serve their customers? And the deputy governor of the PBOC, Fan Yifei, said recently that the tolerance for non-performing loans, especially from small companies, will be increased. How high will you increase the tolerance for those kinds of loans? Thank you.
Tian Yulong:
Thank you for your questions.
The CPC Central Committee and the State Council attach great importance to the sound development of small and medium-sized enterprises, and have required that assistance be increased to key industries and SMEs. Proactive policies should be formulated in advance to prevent enterprises from getting stuck in difficulties and should be fully implemented with targeted measures. As we know, securing the stable development of SMEs is to secure stable employment, so it is very important to mitigate the epidemic's impact on SMEs.
Since the outbreak of the virus, all member units of the State Council leading group for promoting the development of SMEs have undertaken strong coordination and cooperation to produce many supportive policies and measures. Especially on Feb. 9, the Ministry of Industry and Information Technology issued a notice on the work programs to help SMEs resume operations, and overcome difficulties caused by COVID-19 epidemic. The notice specifies that all-out efforts will be exerted to help SMEs resume production in an orderly way, and strengthen support to them with 20 specific measures in six aspects, including fiscal support, financial support, innovation support, public services and overall coordination. The Ministry of Finance and the PBOC have just mentioned the relevant measures.
According to the current monitoring, SMEs have overcome their difficulties and resume operations one after another. In particular, with strong support of local governments and their departments at all levels, the overall work resumption rate has gradually rebounded. At present, monitoring shows the operating rate is close to 30%. At present, SMEs mainly face "five difficulties" when resuming work and production. Just now several fellow leaders also talked about the difficulties. First, it is simply difficult to get work started again. In order to ensure the safety requirements of epidemic prevention and control, local governments have been asking for a large number of approval and evidentiary documents, and so on, so there are still some checkpoints to pass through. Second, the difficulty of employment has not been completely resolved. Due to the impact of the epidemic, the flow of people is not that smooth and is still blocked to a certain degree. Third, industrial chain support is relatively difficult, as logistic operations are far from smooth, raw materials cannot come in, and the finished products cannot be delivered. So, the upstream and downstream links of the industrial chain have not achieved simultaneous resumption, which has a great impact on the normal operation of enterprises. Fourth, funding support is difficult. The funding pressure on SMEs is relatively big, and rigid costs and expenditures are relatively large. However, the subsequent implementation of fiscal and financial policies will hopefully ease the pressure. Fifth, order delivery is difficult. SMEs now have orders in hand, but there is no way to carry out production in a timely manner, and they will have to bear the risk of default.
Generally speaking, there are still many challenges for the steady recovery. In the follow-up progress, we will resolutely follow the spirit of General Secretary Xi Jinping's important instructions. Especially, we will implement General Secretary Xi Jinping's eight-point demand for work and production resumption. which he raised at a meeting yesterday to advance coordination of prevention and control of the COVID-19 and economic and social development. The member departments of the State Council leading group for promoting the development of SMEs will work together to implement various policies to assist small, medium and micro-sized enterprises (SMMEs). Here are five specific measures:
First, we will promote the precise resumption of normal operations by region and classification as soon as possible. This is of great significance to SMEs, because they are scattered across the country, and the geospatial range is relatively wide. We will further increase the work resumption rate of micro, small and medium-sized enterprises, and coordinate with local governments at all levels to vigorously promote the simultaneous work resumption of upstream and downstream SMEs along the industrial chain. Raw materials and auxiliary materials are the factors that will affect the product, so simultaneous resumption of all operations is a very important link now.
Second, we will implement the preferential policies of the finance sector. We will ensure the benefits for SMMEs can be realized, including fees exemption of pensions, unemployment, work injury and insurance premiums, as well as realizing exemption from highway vehicle tolls, and deferred payment of social insurance, etc., in order to alleviate the financial pressure on SMMEs.
Third, all departments will work together to effectively coordinate and solve the practical difficulties encountered by SMMEs when they resume work and production. In particular, for guaranteeing various production factors, the supply of raw materials, the supply guarantee in regard to preventive and control materials, and the practical problems that occur in logistics and transportation. These things should be addressed under the overall joint prevention and control mechanism of the epidemic. All departments should work together in this regard, while ensuring and increasing support for the guaranteed provision of medical supplies, they should adopt this mechanism to support the work and production resumption of SMMEs.
Fourth, we will give full play to the leading roles of central enterprises, state-owned enterprises and major enterprises in the industrial chain, which can help SMMEs in resuming production as soon as possible, and then to achieve output goals, to transform and upgrade, so as to improve their market competitiveness, and make sure their products can sell. The orders can be driven by major enterprises, in this way, the recovery of SMMEs can be accelerated.
Finally, we have to guide and help the SMMEs to prevent and control the epidemic during their resumption of work and production, which is also quite difficult. The joint prevention and control mechanism of the State Council has issued guidelines on epidemic prevention measures for work and production resumption, in order to avoid recurrence of cluster infections. The purpose of these measures is to help SMMEs achieve the goals of reducing burden, stabilizing jobs and maintaining employment as soon as possible. We believe that, with the concerted efforts of various departments and local governments, and with the practical and precise implementation of various measures, SMMEs can speed up the orderly resumption of work and production. SMMEs can definitely overcome the difficulties and ride out the storms through the help of the central government and their own efforts. Thank you all.
