SME uptick in June a good sign


Showing improvement: Workers in a factory producing washing machine parts in Nanjing. China’s economy will likely rebound steadily in the second half of the year, say experts. — AFP

BEIJING: Business operations of China’s small and medium enterprises (SMEs) improved marginally in June on the back of better containment of the Covid-19 pandemic and a package of stimulus policy measures, according to latest data.

Experts said the improvement, even though small, confirms a gradual recovery in growth momentum, and appears to strengthen expectations that China’s economy will likely rebound steadily in the second half of the year.

China’s Small and Medium Enterprises Development Index, based on a survey of 3,000 SMEs, rose by 0.2 point from 88.2 in May to 88.4 in June, according to the China Association of Small and Medium Enterprises (Casme).

The index reported declines for four consecutive months to May.

Xie Ji, secretary-general of the Casme, attributed the slight improvement in June to the gradual resumption of production and stronger policy support.

“Our survey showed that 25.9% of enterprises fully resumed their business, and 42% were operating at over 75% capacity,” Xie said.

Zhou Maohua, an analyst at China Everbright Bank, said the SME activity improved a bit in June amid the accelerated resumption of work and production, a pick-up in market demand, efforts to ensure smooth industrial and logistics chains and government measures to stabilise prices and ease burdens on enterprises.

As growth stabilised in May with improvement in key indicators like value-added industrial output, China’s economy would rebound steadily in the second half, and SMEs will continue to enjoy a favourable environment, Zhou said.




He, however, warned of multiple pressures and difficulties like high costs and shortage of some parts that SMEs might face.

More efforts should be made to implement all existing policies on stabilising the growth and ensuring stable prices and supplies, guide financial institutions to increase support for SMEs and deepen financial reforms, Zhou said.

Casme said the index contains multiple sub-indices that gauge the performance and expectations of SMEs. A reading below 100 indicates dented vitality.

The sub-indices for the eight sectors surveyed, including industry, construction, transportation and real estate, all registered a month-on-month increase in June.

Notably, accommodation and catering reported the largest gain in June, rising by 0.6 point month-on-month to 81.3 in June.

The survey also showed the sub-indices for seven fields, including the sentiment on the macroeconomy and labour force, improved in June.

The sub-index for operating costs remained unchanged in June.

Chen Jia, a researcher at the International Monetary Institute of the Renmin University of China, said the improved performance of SMEs showcased the long-term development resilience of SMEs and their capabilities to deal with pressures in the short term.

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