Bloomberg News

Chinese Premier Wen Pledges Funding Support for Small Companies

February 02, 2012

Feb. 2 (Bloomberg) -- Chinese Premier Wen Jiabao said the government will support small companies with a 15 billion-yuan ($2.4 billion) fund as growth moderates in the world’s second- largest economy.

China will also extend preferential tax policies for small companies until 2015 and will ask banks to increase tolerance of bad loans to these businesses, according to a statement posted on the central government’s website yesterday, citing a State Council meeting presided by Wen.

“Supporting the healthy development of small and micro- sized business is of significant strategic importance for China’s economy to overcome the impact from the global financial crisis and to maintain stable, relatively fast growth,” according to the statement.

China’s economy grew 8.9 percent in the final three months of 2011, the least in 10 quarters, as exports rose at a slower pace and property curbs hurt output of products including steel and cement. Expansion may cool to about 7.5 percent this quarter and 7.6 percent in the three months through June until policies to spur growth kick in, according to Nomura Holdings Inc.

The government has so far refrained from following Asian nations including Thailand in lowering benchmark interest rates and didn’t make a cut in bank-reserve requirements that Industrial Bank Co. and Barclays Capital Asia Ltd. had forecast for January.

China’s manufacturing expanded last month, according to the official purchasing managers’ index, exceeding the median estimate in a Bloomberg News survey for a contraction, suggesting the country is withstanding Europe’s debt crisis and a government-induced property slowdown at home.

--Michael Wei. Editors: Chua Kong Ho, Joshua Fellman

To contact Bloomberg News staff for this story: Michael Wei in Shanghai at mwei13@bloomberg.net

To contact the editor responsible for this story: Stephanie Wong at swong139@bloomberg.net


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