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Professor Guo Tianyong at School of Finance, Central University of Finance and Economics
The year of 2016 brings small and micro-sized economy with both vital challenges and opportunities encouraging reform and innovation.
Seen from the macroeconomic perspective, data released by the National Bureau of Statistics on January 18, 2016 showed that the GDP of 2015 grew by 6.9% year on year. This is the first time for China to see its annual economic growth rate below 7.0% since 1990. which reveals that the growth of the Chinese economy has further slowed down in the period of “new normal”, the de-capacity, de-stocking and de-leverage progresses are not finished yet, and the deficient momentum for growth momentum poses great downturn pressure on the economy. In 2015, China made certain progress in adjustment and optimization of economic structure, which could be mainly attributed to the robust growth in service industry and consumer goods industry. In the year, the increment of the tertiary industry accounted for 50.5% of GDP, up by 2.4% over the last year; with the demand structure further improved, the final consumption expenditure throughout the year contributed 66.4% to the increase of GDP, 15.4% higher than the last year; and fueled by the rising enthusiasm for innovation and entrepreneurship in various industries, the high-tech industries flourished, generating a batch of advanced production capacities with relatively high real economic benefits.
Against such backdrop, small and micro-sized economy will adjust and optimize itself for further growth and also needs the continuous support from the favorable policies and measures.
“Economic Daily-PSBC Small and Micro-sized Enterprise Operating Index” (hereinafter referred to as “SMEOI”) in January reported 46.4, down 0.1 point slightly from the previous month, which indicates that small and micro-sized economy remains under considerable downturn pressure.
Seen from different sub-indices, except the cost index, the purchasing index and the expansion index, other indices saw a decrease in different degrees. Wherein, the confidence index and the financing index presented a continuous decline. It indicates that deficient confidence and difficult financing are two of major problems holding back the growth of small and micro-sized economy. So changing negative market expectation and stabilizing market environment shall be two issues placed high on the agenda.
In terms of SMEOI, different industries displayed a divergent performance. The agriculture, forestry, animal husbandry and fishery, the manufacturing industry, the wholesale and retail industry and the service industry all saw a slight decline. Among them, the manufacturing industry, serving as the basis for small and micro-sized economy to get stabilized and rebound and optimize its structure has been on the decrease for continuous four months; and the service industry, vital to the structural transformation and upgrading of small and micro-sized economy, has been below the purchasing managers’ index for a long period. Therefore, now ahead of small and micro-sized economy are arduous growth, transformation and upgrading tasks. In other words, small and micro-sized businesses shall build up more strength before striding forward.
The on-going structural reform on supply front greatly promotes the long-term development of small and micro-sized economy. It helps guide and inspire innovations in small and micro-sized economy, and enlarges market difference, so as to form new engines for economic growth. However, it is noteworthy that structural adjustment on the supply front is more focused on the improvement in the quality of economic growth in medium and long terms, rather than removing the current bottlenecks confronting small and micro-sized economy. Therefore, in order to promote the development and transformation of small and micro-sized economy, more policies shall be rolled out to match with the structural reform on supply front, thus forming the structural policy support over short, medium and long terms. Equal attention should be paid to short-term growth and long-term transformation of small and micro-sized economy at the same time. Specifically, on the one hand, the tax-for-fee reform shall gather pace to reasonably reduce taxes on SMEs, and meanwhile the industry-oriented preferential tax policies will be improved to guide SMEs’ industry transformation and upgrade. On the other hand, with the coverage of financial channels and the proportion of direct financing expanded further, SMEs will have a better financing environment where funds will be diverted to them through market-oriented means. Meanwhile, governments of different levels can establish corresponding innovation funds to support the local small and micro-sized economy for further expansion and development.