- 1. China SMEs: Todays problem and futures cooperation Dawei
Cheng UN Trade Point Beijing Beijing WTO Affairs Center School of
Economics,Renmin University of China
2. China SMEs
3. SMEs play a key role in job creation and social stability
maintenance
- In Chinas urbanization process(which may last at least for 40
or 50 years) 400-500 millions jobs must be created in
non-agricultural sectors, therefore, no matter in the long term or
in the short term, the SMEs will continue to be the places
absorbing the labors from country.
4. SMEs plays a role in upgrading industrial organization
level
- After WTO accession, more and more foreign companies come and
invest in China, international competition on Chinese market has
started, such competition and cooperation make China SMEs more
stronger.
5. Size of China SMEs
- More than eight million SMEs, accounting for 99 percent of
China's total enterprises, account for 60 percent of the nation's
industrial output and exports. These enterprises also employ three
quarters of the labor force .
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- China SMEs have comparative advantages in foodstuff, textile,
furniture such labor-intensive industries, these industries are
also major sources of Chinas trade surplus.
9.
- In capital and technology intensive industries, like ordinary
machinery, chemicals, telecom equipment, paper-making, they are
also many SMEs.
10. Problems we are facing
11. Government side
- The governments function-transition faces some challenges.
Market economy requests strict prevention against cheating
behaviors in commodity production and exchanges, thus the
government undertakes a heavy supervision and administration task
of maintaining market order. The government has a long way to
go.
12. SMEs belong to the societys weak group
- The SMEs are weak and should get more support from government.
But now the SMEs do not have necessary legal protection and their
social burden are heavy. In some Chinese ares, the local government
does not service the SMEs whole-heartedly, but are enthusiastic
about establishing more SMEs.
13. Scale is not economic
- The SMEs industrial organization faces some challenges, like
their scale is not economic. Small textile factories, small paper
makers throughout the country, causing many problems, like
environmental problem.
14. Lack capital
- In China, private firms produce about 30% more output with the
same capital, labor, and materials than SOEs.Yet these same private
firms receive very little financing from the formal financial
system, which remains focused on serving state enterprises.The
problem is particularly acute for SMEs.The typical SME in China
gets about 10% of its working capital financing from banks; in
Korea or Thailand, the typical SME gets 40% of its financing from
the banking system.These issues of improving financial services
will be the focus one of the sessions in our conference.
15. Facing trade barriers
- Trade has been a crucial engine of growth in China, but Green
barrier becomes biggest obstacle.
- Example: food safety issue.
- China SMEs also face anti-dumpling and other trade
barriers.
16. IPR issue
- China SMEs do not have good brands.
17. 2008, more difficulties for Chinese SMEs
- Recent trade and inflation data released how difficult an
environment China-based exporters now operate in.
- The consumer price index clocked a year-on-year rise of 8.7 per
cent in February a 12-year high exacerbated by shortages stemming
from January's severe snowstorms.
- The renminbi has appreciated 15 per cent against the dollar
since mid-2005.
- The prices of China's exports have been rising for almost five
years.
- China's underlying inflationary pressures make much more
difficult for exporters to continue to absorb the brunt of domestic
cost pressures.
- China's January-February trade surplus provided a hint of what
could lie ahead, falling 29 per cent year-on-year to $28bn.
18. Look into the future
19. Chinas regional policy: Why ASEAN?
- The volume of trade between China and ASEAN had amounted to US$
160.8billion in 2006, growing 23.4% over the previous year
- China and Laos trade grew 69%
- China and the Philippines trade grew 33%
- China and Thailand trade grew 27
- China and Vietnam trade grew 21%
- China and Singapore trade grew 23%
20. Chinas regional policy: Why ASEAN?
- China attaches great importance to regional economic
cooperation. In 2010, China will establish a free trade zone with
ASEAN countries. China has also signed agreements to establish a
free trade zone with Pakistan and Chile and the agreement is being
implemented. At present, China is working to sign agreements to
establish a free trade zone with such countries and regions as New
Zealand, Australia, the Gulf Cooperation Council, Singapore, and
Iceland.
21. Chinas regional policy: Why ASEAN?
- China has 87.5 bln USD of trade deficit with E. Asian region,
why does China still keep free trade policy with ASEAN
countries?
22. Chinas regional policy: Why ASEAN?
- At present, China has entered into a fast round of expansion in
its overseas investment activities. Over the past three years,
Chinas direct investment at overseas market has increased at an
annual rate of 70% or more, making China now one of the biggest
investors in the world.