Li Zibin, Chairman of the CASME, said at a group interview on November 24 that because SMEs provide 60 percent of the country's GDP, 50 percent of its tax revenue and more than 75 percent of job opportunities, the government would never allow massive bankruptcies of SMEs.

Staying healthy

The government does not support all SMEs blindly. At a seminar on SME financing and property rights transfer in Beijing on November 22, Li Zibin said the government would mainly support technology-intensive and environmentally friendly SMEs.

For a long while, SMEs have played an important role in China's economic development, so their contributions should not be obliterated. Nor can it be ignored that the development of SMEs has been putting a great deal of pressure on the country's resources and environment.

According to the Ministry of Environment Protection (MEP), SMEs are businesses that score low in environment protection. Generally speaking, most SMEs have only a few million yuan or less at their disposal to invest in their operations and facilities, so it is difficult for them to invest enough capital to upgrade their pollution-control technologies.

Take the papermaking industry for example. The country's huge tissue paper market has attracted a large number of SMEs. Whenever market competition heats up, more SMEs spring up like mushrooms, consuming excessive amounts of lumber and water and producing significant amounts of pollution. While large-scale papermaking companies have been able to control their pollution byproducts, most SMEs that produce tissue cannot, because they lack the financial resources to put in place pollution-control measures. Therefore, the amount of wastewater discharged by papermakers has become worse.

This is why the MEP is requiring local governments at various levels to prudently approach the issue of SME development from a comprehensive and foresighted point of view when they help the SMEs deal with the current global financial crisis.

Li said government efforts to assist SMEs would produce effects in half a year and would improve the financial results of companies that are technologically advanced, environmentally friendly and labor intensive. The support policies are only "warming measures" to ensure that the SMEs get through the "cold winter," he said. SMEs must rely on improving their own health and mastering the skill of "winter swimming," including making appropriate management changes, cutting costs, upgrading products and improving industrial structures. The government's measures aim to tap the potential of SMEs in innovation, instead of just "transfusing blood" for the purpose of "saving" them, he concluded.