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China's SMEs face adverse conditions in 2011

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CHENGDU, Sept. 1 (Xinhua) -- Financing difficulties, rising costs, and labor shortages have left China's small- and medium-sized enterprises (SMEs) with severe survival predicaments this year, said economic experts at an economic summit.

SMEs contribute a lot to the employment rate and national economic development, Gu Shengzu, a member of the National People's Congress Standing Committee, said, calling attention to the severe difficulties facing SMEs in 2011.

"About 60 to 70 percent of China's SMEs face adverse conditions," said Gu.

A survey showed that 20 percent of SMEs have stopped production, gone out of business or closed down in the city of Wenzhou in eastern China's Zhejiang Province, Gu said.

"If that keeps happening, plenty of small and medium-sized enterprises are likely to go bankrupt, leading to certain unemployment," said Tang Min, an official with the People's Bank of China (PBOC), China's central bank.

Meanwhile, experts called on the government to help these enterprises eliminate difficult conditions and step into the transformation and upgrade stage.

Due to the tightened monetary policy, small- and medium-sized enterprises have found it difficult to get loans from banks, turning instead to private loans for help.

"Around 90 percent of China's SMEs rely on private financing systems, making it very popular," said Gu.

Gu warned that enterprises should understand some potential financial risks brought about by possible disputes over private loans.

The rising costs of raw materials and labor as well as the exchange rate have also prevented some SMEs from accepting new orders, according to Qin Zhihui, director of China Center for Small and Medium-sized Enterprises Development.

Xu Xiaonian, an economics professor at China-Europe International Business School, suggested that the government should provide fair opportunities to SMEs.

"A more favorable environment for the development of SMEs ought to be created," said Xu. "Markets of monopoly industries should open up to SMEs, and tax burdens of SMEs should be reduced as well."

The three-day Asia-Pacific Economic Cooperation (APEC) Small and Medium-sized Enterprises (SME) Summit kicked off Monday in Chengdu, the capital city of southwestern China's Sichuan Province.

More than 100 businessmen, experts, scholars and representatives from the financial sector attended the summit.

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