China’s government is using loans, tax deferments, rent reductions and even sales leads to help smaller enterprises—“capillaries of the market economy”—survive Covid-19.
They are the “other” Chinese economy: millions of small and medium-size enterprises (SMEs) that manufacture, transport and trade outside the special comfort zone in which powerful state-owned companies enjoy government support. Now, they are moving into the spotlight.
The People’s Bank of China in June launched an unprecedented program through which village banks, rural credit unions and other smaller financial institutions receive special incentives to defer loan and interest payments for SMEs due between at least December 31, 2020 and with an extended repayment period until March 31, 2021.
Meanwhile, the State Council (the chief administrative authority) unveiled a plan to funnel some $282 billion to cities and counties for programs designed to help local SMEs and other businesses “most affected” by the pandemic. Premier Li Keqiang has also urged ecommerce platforms to help SMEs explore new markets.
Local governments are lending a hand as well. Already in