China to Help SMEs Cope with Slowdown

Posted by Reading Time: 2 minutes

Oct.28 – China’s Ministry of Human Resources and Social Security says it will implement policies to help labor-intensive enterprises and small- and medium-sized enterprises (SMEs) weather the global financial crisis.

The crisis has hit export-oriented SMEs hard and there has been a wave of factory closures and mass layoffs in the country.

According to Xinhua, so far 3,631 toy exporters or 52.7 percent of the industry’s enterprises have gone out of business in 2008 because higher production costs, wage increases and the appreciating value of the yuan.

Those enterprises are major engines fueling employment in China, creating about 70 percent of new jobs every year, Ding Dajian, an expert at the School of Labor and Human Resources at Renmin University of China told China Daily.

He added, “The collapse of such enterprises inevitably means grave job prospects for migrant workers.”

The National Development and Reform Commission reports that 67,000 SMEs closed during the first half of the year and two-thirds of labor-intensive textile enterprises are undergoing restructuring.

By the end of September, the jobless rate for urban residents stood at 4 percent. The registered urban unemployment rate excludes the vast majority of more than 200 million migrant workers, “far from reflects the true gravity that China faces in its job market,” Wang Dewen, an expert with the Institute of Population and Labor Economics told China Daily.

China’s economy created 9.36 million jobs for the first three quarters of the year while another 4.09 million laid-off workers were re-employed.

“The current global financial crisis has affected China’s employment situation, particularly export-oriented businesses,” Yin Chengji, spokesman for the Ministry of Human Resources and Social Security, said in a news conference.

“The government will help create jobs by encouraging development of labor-intensive industries, small- and mid-sized businesses, private companies and the service sector.”

The new policies include: increasing bank loans and raising export tariff rebates; working out favorable taxation, financing and other policies to encourage start-ups; providing more vocational training for laid-off workers to increase their chances of re-employment; establishing a pension system in rural areas and expanding the urban pension system to cover rural migrant workers.