Small and medium-sized companies in China are set to benefit from more favourable policies soon to be released by the central government.

An official, who asked to remain anonymous, from the Small and Medium-sized Enterprise Department under the National Development and Reform Commission, revealed the department is drafting a document to promote the development of private enterprise, mostly small and medium-sized firms.

"The key goal of the document is to ensure fair market access for private companies, which used to be barred from many sectors," the official said.

All but a few key areas will open to private companies and specific rules on market entry will be written into the document, the official said.

"Through this document and other rules and regulations, we aim to end discrimination against private enterprises," he said.

The official said the document will include innovative rules for investment and financing of private firms.

"We have asked for suggestions on the rules, which are in their final revisions, from many entrepreneurs," he added.

The Small and Medium-sized Enterprises Department was restructured after it moved to the present commission from the former State Economic and Trade Commission (SETC).

Some departments of the SETC and the former State Development Planning Commission were merged to form the new commission in a March revamp of government institutions aimed at improving its macro-economic controls.

The official said the new department will try its best to support the development of small and medium-sized companies.

"We are also studying directions for their development and a plan to provide supporting funds," he said.

Other government departments are also working to promote the development of SMEs.

Liu Mingkang, head of the China Banking Regulatory Commission, said earlier SME funding will be a priority as his commission restructures China's financial system.

"Our first task will be to focus on this issue," Liu said.

SMEs are critical to China's prosperity and aspirations for full employment.

There are more than 8 million such companies in China, accounting for 99 percent of enterprises. They contribute 60 percent of China's industrial output, 40 percent of tax revenue, and 60 percent of total exports.

They also create 75 percent of China's urban jobs.

However, insufficient capital has hampered their expansion in China for a long period of time, said Xia Bing, a senior researcher from the Development Research Center under the State Council.

Over the past few years, China's central bank has worked out a series of policies and measures to support smaller enterprises, tested a credit guarantee system for them and launched a start-up fund for high-tech smaller businesses.

But these initiatives have yet to meet the mounting demand among smaller enterprises for more efficient financial services and stronger policies are needed to support their growth, Xia said.

(China Daily August 7, 2003)