Proposals on Encouraging and Promoting the Development of Medium-Sized and Small Enterprises (full text)
July 6,2000
The following policy proposals are hereby put forward with a view to implementing the spirit of the 15th National Party Congress and the fourth plenary session of the 15th Party central committee, strengthening the support to medium-sized and small enterprises, especially high and new technology ones and promoting their healthy development:
1. Strengthen structural adjustments
(1) Governments at all levels must make full use of the current favorable opportunities for restructuring the economy to promote in a big way the structural adjustments of medium-sized and small enterprises and conscientiously implement the ¡°Catalog of Backward Production Capacities, Processes and Products to Be Eliminated¡± and the ¡°Catalog of Banned Duplicated Projects in Industrial and Commercial Investment¡± to encourage what is advanced and eliminate what is backward. At present, the state gives priority support to medium-size and small enterprises that engage in technology development, absorb labor, engage in comprehensive utilization of resources, farm and sideline processing, export production and community services so as to enable them to improve the quality of products, upgrade their technology and increase variety to satisfy the market demand. Medium-sized and small enterprises that are backward technically, produce inferior products, pollute the environment, waste resources and do not conform to safe production conditions must be resolutely shut down according to the laws, regulations and policies of the state and by adopting effective measures.
(2) It is necessary to simplify the examination and approval procedures concerning the establishment of medium-sized and small enterprises. Unless otherwise provided by law and administrative decrees, departments concerned should not prepose conditions for the examination and approval before conducting registration. It is imperative to study and explore simpler procedures for the bankruptcy and liquidation of medium-sized and small enterprises and gradually establish such systems as close business supervision, risk precaution, debt readjustment and going bankrupt according to law.
(3) We shall persist in the principle of simultaneous development of large enterprises and large groups and support medium-sized and small enterprises and encourage the latter to develop toward specialization and production of the best, special and new products so as to form associated industrial groups with division of labor and complementarities with large groups. We shall give priority support to the development of superior and strong medium-sized and small enterprises and constantly sum up development experience and typical models of different types of medium-sized and small enterprises.
(4) We shall give greater support to the development of medium-sized and small enterprises in the middle and western parts of the country. The local governments in the middle and western parts of the country may, within their term of reference, provide policy support with regard to finance, taxation and land use so as to encourage and absorb all kinds of domestic investors and foreign business people to start medium-sized and small enterprises in the regions.
2. Encourage technical renovation
(5) Governments at all levels must conscientiously implement the ¡°Decisions of the CPC Central Committee and the State Council on Strengthening Technical Creation and Renovation, Developing High and New Technologies and Realizing Industrialization¡± (Central Document No. 14[1999]) and adopt such necessary measures as the founding of risk investment fund to provide effective support to medium-sized and small enterprises, especially those of technology development types with regard to improving technical renovation capacity and promoting the application of research achievements.
(6) On the basis of fully displaying the leading and diffusive functions of all kinds of science & technology parks and industrial parks, it is necessary to sum up the experience of regional and industrial organizations serving medium-sized and small enterprises in their technical renovation and conscientiously implement the spirit of the ¡°Circular Relayed by the State Council General Office of the Ministry of Science and Technology and Other Departments on the Regulations Concerning Stimulating the Conversion of Technology Achievements¡± (State Council Document No. 29[1999]) to accelerate the cultivation of technical renovation bases and industrialization bases for medium-sized and small enterprises.
(7) It is necessary to encourage all kinds of investors to use technology and other production factors as investment in starting medium-sized and small enterprises and the price may make up 35% of the registered capital (except otherwise agreed upon). State-owned and collective medium-sized and small enterprises that have been converted into joint stock companies may use the incremental value of their net assets as their shares according to a certain proportion to reward people who have made special contributions.
3. Strengthen financial and tax policy support
(8) Governments at all levels must, according to the financial situation, arrange a certain amount of investment mainly for use as credit guarantee and assistance at the initial stage, industrialization of technology achievements and discount for technical transformation projects to support the development of medium-sized and small enterprises.
(9) All kinds of medium-sized and small enterprises may enjoy, according to regulations, the treatment of using investment to offset enterprise income tax for technical transformation projects that conform to the state industrial policies they invest inside the Chinese territory. The specific operations shall be provided by the state in a unified manner. Laid-off workers of state-owned enterprises who have launched medium-sized and small enterprises may enjoy the preferential policies of tax exemption or reduction according to regulations. In order to encourage faster development, it is necessary to study how to lighten the tax burdens of small taxpayers with regard to VAT for industrial enterprises. Local governments may determine credit guarantee and re-guarantee organizations for non-profit making medium-sized and small enterprises that have been covered by national experiments and the income from guarantee business will be exempt from business turnover tax within three years.
4. Actively open up financing channels
(10) It is necessary to encourage and support joint stock banks, city commercial banks, urban-rural cooperative financial organizations to mainly serve medium-sized and small enterprises. It is necessary to encourage commercial banks, specially state-owned commercial banks to establish an incentive and restriction mechanism for providing loans to medium-sized and small enterprises under the pre-condition of ensuring credit security, and really raise the proportion of loans to medium-sized and small enterprises while ensuring the quality of loans. At the same time, policy-based banks should be encouraged to support, within their current scope of business, the development of medium-sized and small enterprises that conform to the state industrial policies, have good market prospects, produce products with high technology contents and have good economic efficiency.
(11) Efforts should be continued to expand the range of fluctuation of interest rates on loans to medium-sized and small enterprises. Banks must, according to the characteristics of the operations of medium-sized and small enterprises, timely improve their credit extension system and rationally determine the loan approval power of banks at the county level to reduce links of loan approval and raise work efficiency. It is necessary to actively study the development of services best suited to the development of medium-sized and small enterprises, further improve such financial services as settlement, financial advice and investment management to medium-sized and small enterprises.
(12) It is necessary to expand the direct financing channels for medium-sized and small enterprises and gradually relax the conditions for medium-sized and small enterprises, especially high and new technology ones, to get listed on the stock market for financing and issuing bonds. Some central cities with the conditions may be selected for experiments in the trading among corporate persons of property rights of medium-sized and small enterprises. Medium-sized and small enterprises should be guided and promoted and standardized in using foreign capital for re-organization and technical transformation through launching joint ventures and cooperative enterprises or by property right leasing and other methods.
(13) It is necessary to encourage the public and non-governmental investment and explore for establishing medium-sized and small business risk investment companies and for the management model of risk investment funds and mechanisms of withdrawal. Related departments should tighten the market access of risk investment and the control of practicing qualifications, standardize the market behavior of risk investment and fully display the guiding role of the government in risk investment. Government departments at all levels are not allowed to engage directly in the risk investment business of medium-sized and small enterprises.
5. Accelerate credit guarantee system
(14) Governments and related departments at all levels must accelerate the establishment of central, provincial and prefecture (city) credit guarantee systems that mainly serve medium-sized and small enterprises, especially those of the technology development types so as to create the conditions for medium-sized and small enterprises to get financing. At the same time, it is necessary to establish and improve the access system for guarantee organizations, financial assistance system, credit rating and risk control systems, trade coordination and self-discipline systems.
(15) It is necessary to select a few provinces, autonomous regions and municipalities that have the conditions to carry out experiments in guarantee and re-guarantee to explore ways of establishing state credit re-guarantee organizations for medium-sized and small enterprises to provide re-guarantee services for credit guarantee organizations for medium-sized and small enterprises. At the same time as accelerating the development of credit guarantee organizations, it is necessary to stimulate the development of mutual-aid guarantee among enterprises and commercial guarantee businesses. Medium-sized and small enterprises guarantee organizations with government investment must separate their administrative functions from enterprise management and introduce market-oriented operations and should be incorporated into the local medium-sized and small enterprise credit guarantee system. Government departments at all levels are not allowed to operate specific guarantee businesses.
6. Improve socialized service system
(16) Governments at all levels must shift their management functions with regard to medium-sized and small enterprises and promote the establishment of systems serving medium-sized and small enterprises in fund accommodation, credit guarantee, technical support, management consulting, information service, market opening and personnel training and provide the service systems with necessary financial and policy support. It is essential to stimulate the development of associations of medium-sized and small enterprises and other intermediary organizations, establish effective business standards and a supervisory mechanism, intensify supervision and control, realize socialization, specialization and standardization of services.
(17) Governments at all levels must, proceeding from the local realities and in the course of reform of the science and technology system, encourage and support all research units to convert into intermediary organizations to mainly serve medium-sized and small enterprises; encourage and support research institutions, universities and colleges and all kinds of chambers of commerce and other organizations to offer energetic service to medium-sized and small enterprises and, through technology trade talks, bidding for the procurement of patents and parts and accessories and personnel training, provide medium-sized and small enterprises with services in technical renovation and industrialization of technology achievements.
(18) It is necessary to make full use of computer networks and other advanced technical means to gradually establish and improve medium-sized and small enterprise information service system open to the whole society to make it easy for medium-sized and small enterprises to acquire information on policies, technology, market and personnel. In areas where there are the conditions, experiments may be carried out in E-commerce for medium-sized and small enterprises so as to prepare the conditions for reducing market development cost for medium-sized and small enterprises.
(19) It is necessary to adopt such forms as government guidance, trade tutoring, mutual aid among enterprises and training by enterprises themselves to make full use of the existing management schools and training centers to carry out investment consulting and vocational skill training for medium-sized and small enterprises and gradually establish managers evaluation and recommendation centers and develop and improve the market for medium-sized and small enterprise managers.
7. Create an external environment for fair competition
(20) It is necessary to improve actively the operational environment of medium-sized and small enterprises. Governments at all levels must, in the light of the local actual conditions, conscientiously remove, according to law, administrative decrees and policies that are unfavorable for the development of medium-sized and small enterprises and formulate policies favorable for the development of medium-sized and small enterprises so as to promote a healthy development of such enterprises in their own areas.
(21) All places and related departments must strictly implement the spirit of the ¡°Decisions of the CPC Central Committee and the State Council on Controlling Indiscriminate Fee Collection and Fines and All Kinds of Distortions on Enterprises¡± (Central Document No. 14[1997]) and really lighten the burdens of medium-sized and small enterprises. The regulations on payment of management fees and capacity expansion fees for water, gas and power supply by medium-sized and small state-owned and collective enterprises at the county level must be gradually scrapped. The standards for mortgage loan registration fee collection for medium-sized and small enterprises should be lowered. All places should strengthen supervision and checks of the implementation of fee collection items authorized to be scrapped and put forward specific measures for exempting or reducing expenses of medium-sized and small enterprises in their own areas. Cases of increasing the burdens of medium-sized and small enterprises under any pretexts or in disguise must be resolutely checked and punished. Governments at all levels must create the conditions to encourage large enterprises to contract out part of their products or parts and accessories to medium-sized and small enterprises. At the same time, they must resolutely remove all sorts of local protectionist measures to create a market environment favorable for the fair competition between medium-sized and small enterprises and large ones.
(22) It is necessary to encourage and support medium-sized and small enterprises to conduct their own imports and exports and accelerate the pace of transition from approval system to registration system and help medium-sized and small enterprises that meet the requirements to go through the related procedures so as to prepare the conditions for them to participate in international competition. Medium-sized and small enterprises, especially those exporting high and new technology products may enjoy the preferential treatment contained in the ¡°Circular Relayed for Transmission by the State Council of the Ministry of Foreign Trade and Economic Cooperation and Other Departments on Adopting Further Measures to Encourage the Expansion of Exports¡± (State Council Document No. 71[1999]) and encourage foreign investors to start medium-sized and small enterprises of their own or with participating shares.
8. Strengthen organization and leadership.
(23) To encourage and promote the healthy development of medium-sized and small enterprises is a long-term arduous task of strategic importance. Governments at all levels and related departments should set great store by the development of medium-sized and small enterprises. They must persist in the principle of invigorating and supporting their development and, with market as the orientation, support and service as the purpose, create a good external environment for their development. All places must proceed from the situation of the whole country and strengthen organization and leadership and really take up responsibilities to do the policy coordination work well concerning the development of medium-sized and small enterprises.
In order to promote the development of medium-sized and small enterprises, the State Economic and Trade Commission should take the lead in forming a leading group for promoting the development of medium-sized and small enterprises with the participation of the Ministry of Science and Technology, the Ministry of Finance, the People¡¯s Bank of China and the State General Administration of Taxation. The office of the leading group should be in the State Economic and Trade Commission. All places must in the process of local organizational reform straighten out the medium-sized and small enterprises management system and designate organizations to take charge of medium-sized and small enterprises in order to push the development of medium-sized and small enterprises in their own regions.
(24) Related departments should, on the basis of investigation and study, put forward as soon as possible the statistical index system and standards for medium-sized and small enterprises that objectively reflect their actual conditions.
(25) The above proposals are applicable to all kinds of medium-sized and small enterprises in both urban and rural areas including those owned by the state and collectives, private enterprises, joint stock companies, joint stock cooperatives, partnership enterprises and individually owned enterprises. The specific methods for implementation shall be worked out by related departments of the leading group for promoting the development of medium-sized and small enterprises.
