Editor’s note: China Business Journal recently published an NPC and CPPCC report entitled, CPPCC National Committee member and Yintai Group Chairman Shen Guojun: Support private enterprise growth and consolidate the “employment-consumption” chain. The following is the full text of the report.
COVID-19 has adversely affected the Chinese economy since the beginning of the year, and the entire nation is concerned about how economic recovery could be accelerated as quickly as possible.
A China Business Journal reporter found out in an interview with Shen Guojun, CPPCC National Committee member, Executive Chairman of the General Association of Zhejiang Entrepreneurs, President of the General Association of Ningbo Entrepreneurs, and Founder and Chairman of Yintai Group, that he has been paying attention to and thinking about this issue. Following the outbreak of COVID-19, he organized a large-scale survey through the General Association of Zhejiang Entrepreneurs, General Association of Ningbo Entrepreneurs and Zhejiang Chamber of Commerce in Beijing to collect the views and suggestions of private enterprises, resulting in the Proposal for Providing Further Support for Private Enterprise Development and Consolidating the “Employment-Consumption” Chain to Promote Economic Recovery.
As work and production resumed, and during this key stage of economic transformation in China, Shen believed that the government should create strategic opportunities for SMEs as they rehabilitate, and remove unreasonable restrictions related to work and production resumption. In particular, excessive or frequent policy adjustments should be avoided, and stronger policy flexibility and leeway expressed, so that enterprises could be afforded stable psychological expectations, and direct more of their efforts to fully mobilizing and activating productivity to resume normal operations as soon as possible.
Hence, Shen advised policy support for private enterprises, and intensifying efforts to stabilize enterprises and protect employment. Private enterprises such as large wholesale markets, commercial complexes, commercial pedestrian streets and logistics enterprises are big employers, and had bore the brunt of COVID-19. He recommended expanding the scope of VAT reduction and exemption for SMEs, as well as extending the deadline for deferring tax payments, and the period of implementation of tax policies related to supporting COVID-19 prevention and control as well as material supply.
In fact, since the COVID-19 outbreak, all levels of the government have introduced massive supportive budgets, with central enterprises, State-owned enterprises and large enterprises garnering the largest share, while the most economically dynamic SMEs, which are also the nation’s biggest employers, still “crying piteously like nestlings waiting to be fed”.
In this regard, Shen believed that SMEs that had kept employment positions generally intact should be granted an extension on deferment of principal and interest payments, and leeway should be given when handling their loan, guarantee, and pledge requirements. In addition, support should be given to banks to extend more interest-free or low interest credit loans through special refinancing or rediscount, encouraging large State-owned banks to extend inclusive small or micro loans, increasing policy banks’ special credit quota, and other means.
“All levels of the government should grant fiscal subsidies, or tax reduction or exemption to enterprises that have taken the initiative not to lay off staff or eliminate duties. In particular, key enterprises that have made major contributions to the local economy should be encouraged to develop across multiple related industries, create employment opportunities, promote consumer demand, and bring into play the factors that will facilitate growth of the industry chain,” said Shen.
While short-term economic stimulus should be carried out effectively, medium- to long-term restructuring should also be taken into consideration. He advised that some of current supporting policies that are effective be included in the legislation so that these could play an active long-term normative role.
“Whether private enterprises can develop successfully, and whether employment can remain stable will affect the performance of the “employment-consumption” chain, and directly affect the quality and progress of China’s economic recovery.” Shen said that only by adequately addressing fundamental issues such as excessive taxes on enterprises, unemployment anxiety, repeated consumption expectations, and relatively weak social security, can the issue of sluggish domestic demand be resolved, resulting in consumption renewal and the release of potential.