Small And Medium Enterprises In China Suffer From "Money Shortage"

A government backed agency has warned that Chinese SMEs are feeling the government's tightening. currency The impact of policy measures on cash flow difficulties they are facing may be greater than that in 2008. financial crisis The period is even more serious.

From Shanghai to Hongkong, SMEs have been pushing China for the past 20 years. Economics Growth accounts for about 60% of gross domestic product (GDP). If these enterprises' activities fall sharply, they will bring heavy pressure to the global economy.

Over the past two years, the world has become more and more dependent on China as a locomotive for growth. Therefore, if China's economy slows down and the recovery of the US and Europe stagnate, it will be particularly worrisome.

The official Shanghai Securities News Thursday issued a warning from the government supported China National Federation of industry and commerce, which conducted research on SMEs in 16 provinces.

At the end of 2008, during the financial crisis, the global export market collapsed and domestic monetary policy tightened sharply, resulting in the Chinese economy almost stagnating. About 20 million migrant workers lose their jobs.

Tao Dong, an economist at Credit Suisse, said that as companies postpone paying their bills and factory owners do not pay their wages, China may be in trouble again.

"If this situation continues, these small and medium-sized enterprises begin to fail a lot, then the economic slowdown will exceed the expectations of the market and the government's original intention," Tao Dong said.

The possibility that millions of factory workers can't get wages worries Beijing, and the Chinese government is very vigilant about anything that may cause unrest.

According to Chinese media reports, more than 200 people surrounded a government office building and set fire to a car in Chaozhou, southern China, on Monday. The reason is that a worker was chopped by someone who was instructed by a factory owner for recovering wages.

Despite repeated efforts by the Chinese government to urge relevant institutions to help private enterprises, these enterprises still face cash shortages. Chinese banks tend to lend to state-owned groups and believe that such enterprises pose little risk of credit.

This tendency is particularly prominent in the period when the government restricts credit. In the past year, the Chinese government has been restricting credit.

The PBOC has raised benchmark lending rates by 100 basis points to 6.31%, but small businesses are facing more steep interest rates.

In Wenzhou and Xiamen, where entrepreneurs are concentrated, the monthly lending rate of credit unions and informal lending institutions has reached 5% in the past few weeks, much higher than 1.5% of nine months ago.

Earlier this week, the China Banking Regulatory Commission said it would relax the strict capital rules applicable to lending to SMEs. Banking analysts at Barclays Capital suggest that it might be more sensible to provide government guarantees and subsidies to SMEs.