SMEs require structured, targeted subsidies, analyst says
More structural measures and targeted subsidies need to be provided to Chinese small and medium-sized enterprises to help them pull through the difficulty caused by the novel coronavirus outbreak, an macroeconomic analyst said on Friday.
SMEs contribute over 60 percent of the country’s GDP and is a cornerstone of the economy, Zheng Xinhuang, an analyst from GF Securities Hong Kong, said.
“Micro, small and medium-sized enterprises are suffering the most at the moment. There needs to be more structural measures and targeted subsidies for them,” he said.
In addition to the stimulus already launched, Zheng suggested that structural measures such as reform of tax and social insurance system be taken to reduce long-term cost for SMEs. The government could also consider setting up a SME rejuvenation fund to lift them out of the economic storm, he added.
“Those long-term and structural measures will significantly enhance long-term competitiveness of Chinese SMEs and fuel steady growth of the economy and employment,” Zheng said.
While the epidemic outbreak has disrupted factory production, the effect of government’s stimulus measures will be visible in GDP growth of the second, third and fourth quarters, which could be higher than markets previously forecast, he added.