China Announces $2.5B Fund For Small Businesses

China small business fundBy Joe McDonald

BEIJING (AP) -- China announced more help Wednesday for its struggling private business sector, unveiling a $2.5 billion fund to finance new small businesses and promising tax breaks and more lending for entrepreneurs.

The Cabinet announcement was one of the first concrete measures announced by the government following repeated pledges to help entrepreneurs who have been squeezed by a slump in U.S. and European demand and curbs on bank lending.

Entrepreneurs generate most of China's new jobs and wealth, but thousands have been driven out of business. The survivors have slashed payrolls, raising concern among China's communist leaders about possible unrest.

A Cabinet statement issued after a meeting led by Premier Wen Jiabao, the country's top economic official, said small companies were essential to helping China keep growth fast and stable despite the global downturn.

The government will create a 15 billion yuan ($2.5 billion) fund "primarily to support the start-up of small and micro-enterprises," it said.

It gave no details but also promised a cut in taxes and fees and said small businesses will be guaranteed a portion of government purchases of goods and services.

Beijing ordered the state-owned banking industry to lend freely to help China's economy rebound from the 2008 global crisis. But it clamped down on credit to preventing overheating after annual economic growth soared above 10 percent in 2010.

Economic growth fell to a 2 1/2-year low of 8.9 percent in the final quarter of 2011.

Two surveys released Wednesday gave mixed signals on manufacturing activity in January but both showed it largely unchanged.

The state-affiliated China Federation of Logistics and Purchasing said its purchasing managers index rose 0.2 points to 50.5 from December's 50.3 on a 100-point scale on which numbers above 50 indicate growth.

HSBC Corp. said its HSBC China Manufacturing PMI was little changed at 48.8 from December's 48.7, suggesting a "moderate deterioration."

The credit clampdown battered entrepreneurs as banks channeled their limited lending to politically favored government companies. Entrepreneurs turned to high-interest underground lenders. Thousands went bankrupt, leaving employees and suppliers unpaid.

The government responded in October by ordering banks to step up lending to small businesses, though it is unclear whether credit has increased.

Wednesday's statement promised to create more small-scale financial institutions to serve entrepreneurs and rural companies.

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too many misinformed people outt there. don't you know this bailout was a ruse by the unknowns to raise money [we don't have ] to pay for items americans would'nt put up with ? If you bypass congress & the senate an pass the blame on others, stir up deversion from what's really going on.move money to secret projects.create millitary weapons not to kill americans but to keep them at bay. hoarding food.water air purifi systems etc.etc they know something we don't ,,I have a friend in codorado who contracts gov. work anyway they have been building a honey comb fortress for fifteen the mountians WHY an who's paying for it

February 02 2012 at 3:59 AM Report abuse rate up rate down Reply

soon china will be more free then the united states

February 01 2012 at 11:09 PM Report abuse rate up rate down Reply

soon china will be more free then the united states

February 01 2012 at 11:08 PM Report abuse rate up rate down Reply

All the money they made selling to Wal Mart

February 01 2012 at 11:05 PM Report abuse rate up rate down Reply

Proof positive even China is learning faster than our home grown liberals.

February 01 2012 at 11:04 PM Report abuse rate up rate down Reply
1 reply to Aphidavis's comment

So we don't import liberals? Seems like we should as we're failing behind with tax cuts for the rich thinking and neocon war mongers.

February 02 2012 at 1:17 AM Report abuse -1 rate up rate down Reply

Iran is in bed with venezuela and cuba. America is overrun with illegal aliens, drug cartels, terrorists and dirty bomb making materials all flooding in across the mexican border that is left wide open. Islamic sleeper terrorist cells are set up all across America. Armageddon is on the horizon thanks to Obama. better invest in lead while you still can, money will be useless

February 01 2012 at 9:05 PM Report abuse +1 rate up rate down Reply
1 reply to coonodor's comment

Well, you should go to the CIA and FBI after they release you from the padded room.

February 02 2012 at 1:18 AM Report abuse -2 rate up rate down Reply

If our own government would have done this instead of bailing out Wall Street, perhaps we would have jobs here in the U.S.

February 01 2012 at 7:59 PM Report abuse +3 rate up rate down Reply
1 reply to lindavear's comment

Well, you should call the repubnuts and tell them that Obama can't get any bills through to support small business from party of NO.

February 02 2012 at 1:19 AM Report abuse -1 rate up rate down Reply

In this country shake up would =firings, layoffs, could my USA government spell shakeup the way China Does? We used to be the best??? Fire all of our congressmen and senators, do not re-elct any of them! Send the word...............

February 01 2012 at 7:53 PM Report abuse +1 rate up rate down Reply

I'm sure Putin is keeping his eye on this. While no longer communist, he want's Russia to become an economic power in order to raise the Russian Military up to it's "rightful place as a World Power, no longer will the West see us as a Third World Nation." Hating the US especially for unknown reasons. The meeting in Siberia with Medvedev, as Putin was at his side, along with the Chinese entering into pledges and contracts for the extraction of earth metals exactely and ferrous metals tangentially, will come about following Putin's re-installation as President. While the United States - with all it's vaunted TARP money for large banks the insider Paulson continually informed those megaliths about what all was going to happen in the Markets (stocks, currency AND commodities) because of the emergent nature of the "need" brought on by their very own actions - let the Wall Street firms position themselves and decide to pay off the US Government post haste since the chances of control did not want to be felt by any one of them. The US Government required a "reciprocity" of lending to small businesses which NEVER happened. Like the proverbial elephant eating all that money, then having it get stuck in the "intestines" of the Finance Houses and Banks (run amok by the decrease (or ignoring of release from Glass-Steangle) regulations) and coming out to the Economy at Large of the United States as though thru the ass of a shrew. Or mouse - take your pick - layoffs and shutterings were foreseen by anyone with half a mind and flavor for Banking "remedies" used in the past. They didn't want ANY control, ANY oversight. Then in attempts to "make back" any fortunes they may have lost in this mistake of their own making - though they'd never admit they had any part of it that meant THEY should be held responsible, thought up ways to make it back (no need mention B of A's lunacy) and maintain paying exorbitant "bonuses" since they didn't want to "lose such talent" as what could be found in their idiot and moribund stable of traders. As though investors and shareholders wouldn't have found the benefits in Asia by themselves without them. Unlike many other industries, Wall Street feels that rewarding those they pay the most to are "talent" to be kept. Other's feel employees "overpaid" and run them down the rail to be replaced by a freshly minted graduate of a Ivy League college. Sure, clients are key - no one wants to throw out a White Whale in the Market by letting a trader go - but if the firm is good - then it's good no matter. Traders have actually died and the Street moves on. Too bad it's the analyst who actually DOES the tactical/strategic figuring that's important. With China - colluding with Russia - it won't be long, with Putin's power, that cheap labor and the need for more "elastic" industries (the structure is still there) will come to the fore - and with all that ready cash injected into the Russian economy - Putin will be hailed a hero.

February 01 2012 at 4:58 PM Report abuse rate up rate down Reply

Wow, that shows things have gotten better in China. For centuries they made an art out of SHAKING DOWN small businesses..

February 01 2012 at 4:33 PM Report abuse rate up rate down Reply

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