Aug. 12 – Officials from the Zhejiang provincial development and reform commission assured that while companies in the region were suffering from financial difficulties, it was not as grave as previously reported in the media.

“Private firms in our province did suffer a reduction in profit, tight liquidity and a low level of creativity,” Liu Ting, deputy director of the Zhejiang provincial development and reform commission, told Xinhua.

Zhejiang province is home to 203 firms included in the country’s top 500 private companies. Businesses active in the export industry have been feeling the pressure from tighter currency policy, rising prices of raw material and changes in tax policies.

The Zhejiang Federation of Industry and Commerce Chairman Xu Guanju added,”Driven by a booming economy and a favorable stock market, some enterprises had expanded too fast. This led to tight liquidity when the macroeconomic situation changed.”

Past media reports said that small and medium private firms in the province have not been able to cope and forced to shutdown. There were reports that 20 percent of 300,000 small firms in Wenzhou have closed while another said that in the industrial hub of Yiwu, around 5,000 factories have filed for bankruptcy.

“The situation is not so serious as reported,” Xu said, “The provincial GDP growth stood at 11.4 percent in the first half of this year. We all know private firms contribute to at least 70 percent of it.”

Liu added, “The private economy grew very fast in the past few years and now it enters into a period of adjustment.”

The Zhejiang provincial government has promised to help businesses by providing microcredit programs, township banks and abolishing some administrative charges.