After his inspection in Wuhan, General Secretary Xi Jinping inspected Zhejiang, where the private economy is active. This inspection sent a clear signal to all sectors of the society: with the epidemic prevention and control continuously improving, economic development needs to be put on the right track as soon as possible; in the important period of economic and social recovery, the recovery and development of SMEs is very important.
The choice of the places of inspection carries profound meaning: the first stop is Ningbo Zhoushan Port, the world’s first cargo throughput for 11 consecutive years, and the second stop is Beilun Daqi High-end Auto Parts Mould Park, where small and medium-sized private manufacturing companies are sited. The former is a barometer of the economy, while the latter is the small and medium-sized enterprises known as the “capillary” of the economy. Both of them are the pillars of our country, one of the world’s leading manufacturing powers.
Soliciting opinions
Facing the epidemic, SMEs are experiencing a hard period. Compared with large enterprises, SMEs have relatively weak anti-risk abilities. According to a survey report by China Association of Small and Medium-sized Business Enterprises, the revenue of 58.25% of the companies is expected to fall by more than 50% in the first quarter of this year.
“In the fight against the CORVID-19, different industries and enterprises have been affected to some extent”, said Xi Jinping during his inspection in the park. This inspection targets the small and medium-sized enterprises across the country is designed to solicit their opinions.
Involved in this epidemic, both entrepreneurs and employees must be filled with mixed feelings.
Yiwu, Zhejiang, not far from Ningbo, known as “World Supermarket”, is now facing high survival pressure. According to a survey conducted by China Economic Weekly, affected by this epidemic, currently the passenger flow in Yiwu has been reduced by two-thirds compared with that before the new year. Worse still, a large number of overseas orders have been canceled, and even a large percentage of domestic orders have been significantly canceled.
On the demand side, the decrease in foreign trade orders is a major blow; on the supply side, the increase in the prices of imported raw materials is another major blow. Many manufacturing companies need to import components from overseas, and the prices have risen sharply during the epidemic. A company manufacturing smart meters reported that the prices of imported raw materials such as electronic capacitors rose by 80%.
According to relevant authorities, due to insufficient supply or even interrupted supply chain, coupled with weak market demand, the return of funds is slow and in small amounts, and some companies may be trapped in shortage of operation funds in the second quarter. Therefore, the situation is truly severe.
In this special period, General Secretary Xi Jinping gave a special thought to SMEs, which is of great significance.
What does private enterprise mean for the Chinese economy? A popular saying is “five, six, seven, eight and nine”, which means private enterprises contribute more than 50% of the country’s tax revenue, more than 60% of GDP, more than 70% of innovation, more than 80% of urban employment, and more than 90% of the number of enterprises .
If the SMEs are unable to survive, the most direct impact will be employment. SMEs provide more than 80% of urban employment opportunities. Enabling SMEs to survive is securing the subsistence of most people and thus social stability.
This year, the employment pressure is particularly high. According to the data from the Ministry of Human Resources and Social Security, there are 170 million migrant workers in China, who are influenced most severely and most directly by the epidemic, including 27.29 million registered poverty-stricken laborers working outside their hometown. Another group attracting much attention are 8.24 million college graduates. This is a record high number of would-be job seekers, who will face unprecedented employment pressure.
A series of measures
At the Politburo meeting before Xi’s departure for Zhejiang, it was explicitly requested that “Efforts should be made to minimize the losses caused by the epidemic, to strive to complete the tasks for economic and social development throughout the year, and to ensure that the objectives of building a moderately prosperous society in all respects and winning a decisive victory in poverty alleviation are achieved.”
In the historical task of building a moderately prosperous society in all respects, employment is an economic topic and a test related to the improvement of people’s livelihood.
Since the outbreak of the epidemic, the CPC Central Committee’s decisions and deployments are filled with forethought. During his visit to the parks, Xi Jinping said that “we have introduced a series of preferential policies.”
Looking back at the past two months, in response to the difficulties faced by small and medium-sized enterprises, relevant state departments have implemented a series of fiscal, tax, financial, social security and other policies such as reducing the VAT levy rate of small-scale taxpayers, reducing and exempting corporate social insurance premiums, and implementing deferred payment of housing provident funds.
During the epidemic, cash flow is the lifeblood of an enterprise. From the central to the local governments, the measures to support SMEs have been unprecedented. According to the data from the China Banking Regulatory Commission, the loans available can be lent to more than 22 million small and medium-sized enterprises plus individual industrial and commercial households and small business owners, including more than 14 million individual industrial and commercial households.
The “series of measures”, like acupuncture, which has pinpointed acupuncture points, are allowing many small and medium-sized enterprises to gain a foothold under the shock wave of the epidemic.
However, the epidemic has caused a global impact on global production and demand, and the future impact is still difficult to predict. Therefore, the supreme leaders stated that “as the situation changes, the measures adopted will be improved in a timely manner, and more targeted measures will be introduced to help SMEs to resume production as soon as possible and make new developments”. This will undoubtedly set the mind of SMEs at ease.
New development
According to Xi Jinping at the G20 video conference a few days ago, China will contribute to world economic stability. With these words, the responsibility and self-confidence of China as a great power came to light. SMEs must shoulder this proper responsibility.
From hand sanitizers, masks, to ventilators, Chinese small and medium-sized enterprises are all working hard to provide epidemic prevention materials that are in short supply throughout the world. In the global supply chain of other products, if Chinese SMEs are missing, the results can be disastrous.
Take Ningbo, recently inspected by the General Secretary, as an example. One-third of the cutting wire used to cut high-precision parts in the world is made in Ningbo. More than 40% of the bobbins used by the sewing machine manufacturers across the world are produced in Ningbo; one out of every eight batteries in the world comes from the Bank of China (Ningbo) Battery Company.
Take a look at a set of public news again: antibiotics used in America and the APIs needed in India are highly dependent on China, and many of India’s key antibiotic-based APIs are almost 100% reliant on China; South Korea’s auto manufacturers like Hyundai, Ssangyong, and Kia have ceased their operations. Just because the wires used in the vehicles are not available.
Of course, the central government’s expectation is not just to gain a foothold, but to strive for “new development”.
An interesting phenomenon is that during the epidemic, some companies’ orders have been increasing rather than decreasing. In January and February this year, Zhejiang achieved a threefold increase in information transmission software and information technology services. The root cause is that these areas have formed industrial chain clusters and digital economy modules, thus reducing the risk of being influenced by the epidemic.
The epidemic is a challenge, but from the other side of a coin, why is it not an opportunity for industrial chain transformation and upgrading? In the past, it was often said that “overtaking in curves”, and now there is a term called “introducing capital to supplement the production chain”. Whether the strategic emerging industry chain clusters can be created or not is closely related to the long-term development. This promises unlimited business opportunities for the majority of SMEs in the global industrial chains.
