In December 1980, the spring thunder of reform and opening up, Zhejiang Wenzhou issued China's first "individual business license". In the blink of an eye, more than 40 years have passed. From the "individual households" that were popular all over the country at the beginning, to now more than 60% of the Gross Domestic Product is contributed by the private economy.

Private economy has already taken up the banner of the national economy and has become the blood and driving force of the national economy.

However, influenced by various factors, the current private enterprises are not easy to get by - the real estate market is crazy to empty the consumer's pocket, the Internet economy is unregulated and bottomless to harvest the real economy leek; finance has become a vampire, unscrupulously damaging the body of the real economy.

Some enterprises, which were originally walking steadily, now seem to be walking on thin ice; some are hard to support, afraid that one day they will not be able to support it; some bosses are directly on the blacklist, becoming "deadbeats", and the enterprises are also half-dead "zombies".

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A fish pond, a fish is dead, that is the problem of the fish, if a pond of fish are dying, it must be the problem of the water, the problem of the environment.

Although the government has been introducing policies to desperately row, trying to pull a turn, but most are long-term plans. In fact, small and medium-sized private enterprises are still in urgent need of some life-saving straws that can be quickly implemented. I think this should be the most urgent topic that economists should study now.

More "money" · Reduce the financial pressure of small and medium-sized private enterprises01 Prompt Repayment & Clearing Private Enterprise Debts

In 2022, some local governments and state-owned enterprises (SOEs) in Henan Province owed a total of 9.563 billion yuan to private enterprises, including 86 municipal and county governments and 14 SOEs. Small and medium-sized enterprises (SMEs) have been advancing funds to larger enterprises, to the point where they themselves are struggling with cash flow and have to resort to high-interest loans, causing costs to soar.

Setting aside the principle that debts must be repaid, the sheer scale of these debts has already severely impacted the operation and development of enterprises, towering like a mountain and effectively strangling the private sector's ability to move.

It's important to recognize that only a minority can wield influence in the capital market. Many private enterprises start with small capital and modest profits, and the more grassroots-oriented businesses are, the more they require a stable and abundant cash flow. Not to mention strongly supporting the private economy, but for the sake of fair market transactions, local governments and SOEs must step forward, settle their accounts, and remove this "hard nail" that harms the private economy.

Authorities in all regions and departments must also quickly establish an accounting system, set a deadline for the repayment of debts, and clear them. Those who are seriously in arrears should be included in the "blacklist" of dishonesty, and the intensity of punishment and accountability should be increased to form a reverse pressure mechanism. The "Promotion Law of Small and Medium-Sized Enterprises" must also keep pace, so that large enterprises and monopolistic industries that owe money to SMEs pay late fees, treating their "old defaulter disease". This money can also serve as a credit endorsement for SMEs to raise funds, killing two birds with one stone.

Burden Reduction Should Be Realistic: Tax Subsidies and Dual Approaches

Firstly, the government must take action to "distribute money", provide subsidies or tax exemptions to small businesses, and prevent them from being crushed by fixed expenditures such as rent and wages. In particular, tax relief needs to be intensified. For example, for small and medium-sized technological innovation enterprises, a "research and development red packet" can be introduced, allowing them to set aside 5% from their sales revenue or 20% from their pre-tax profits specifically for a research and development fund. In this way, the corporate income tax paid by enterprises is reduced, and their enthusiasm for innovation and research and development is stimulated, effectively reducing the tax burden.

Next is financial subsidies, job stability subsidies, employment subsidies, and per capita distribution, which must continue to advance supply-side reforms to loosen the constraints on private enterprises. Costs such as land, logistics, taxes, financing, and utilities should be reduced wherever possible.Finally, the rescheduling of debt repayments must be put on the agenda. Many private enterprises are not without business, but the banks are withdrawing loans too aggressively. If measures can be introduced, such as postponing repayments, to provide an "emergency blood transfusion" to businesses, extending the lockdown for a few years, allowing businesses to catch their breath and gather strength, the chances of getting through the difficult times can be greatly increased.

Support must be accurate, making borrowing easier and financing channels wider.

Look at those top 500 private enterprises, more than half are crying out about the difficulty and high cost of financing.

Because small and medium-sized enterprises often lack collateral and guarantees, they often have no way to get loans. Bosses often have to mortgage their own houses to get loans. Coupled with some banks' "channel companies" running around, the loans obtained are layered and have become usurious loans. This is not a blood transfusion, it is simply drinking poison to quench thirst.

To solve this financing problem, it is necessary to start from the root. The credit system must be improved, the guarantee system must be established, financing channels must be broadened, and supporting measures must keep up.

First, banks and enterprises must have equal information, and everyone must have a clear account. Like Taizhou and Wenzhou, the government builds a platform, shares credit information, banks dare to lend, are willing to lend, and even compete to lend. Banks can release products for enterprises to "compare three families", and enterprises can also turn over and become the masters.

The government also needs to act as a "guarantor" for small and medium-sized enterprises, increasing their credit endorsement. Many local governments have also established credit risk compensation mechanisms, focusing on key areas, and opening green lights for private enterprise financing.

The bank's mortgage system also needs to be changed, don't just focus on real estate. The intellectual property rights, patents, and team reputation of small and medium-sized enterprises are all treasures, and they should be allowed to become the "hard currency" of loans. The mortgage methods should be flexible, guarantees, pledges, retentions, deposits, whatever is useful, let the collateral warehouse of small and medium-sized enterprises become rich.

In addition, loan approval should also be simplified, strictly preventing loans from becoming usurious loans. New technologies should be used, online loans can be completed with one click, like Alipay and 360 loans, to avoid too many intermediate links, and corruption will follow.Finally, encouraging policies are indispensable. Establish a national-level innovation fund for small and medium-sized enterprises (SMEs), starting with a scale of three trillion, to pool money from society, private sources, and the enterprises themselves to promote entrepreneurship and innovation, and support high-precision and high-end SMEs. In this way, SMEs can unite to keep warm, forming an army of innovation, and private equity funds must also keep up. This approach not only solves the problem of private capital running around everywhere but also provides timely rain for those SMEs that urgently need funds.

In a word, borrowing money should be simple, fast, and cost-effective, allowing SMEs to no longer be "crying for help" but to "eat well" and grow healthily.

02 Less "Intervention" - Unleash the Vitality of Private Enterprises

According to World Bank data, countries with less government intervention tend to have stronger innovation capabilities in their private enterprises and more vigorous economic vitality.

In the past decade, private enterprises that have gained more autonomy and less "meticulous care" have seen an average growth rate nearly 20 percentage points higher than those under strict control. They have created countless job opportunities, while industries with excessive intervention often develop slowly and lack vitality.

Especially now, what private enterprises need is sunshine and rain, not too many constraints.Firstly, avoid imposing fines at the drop of a hat. Currently, corporate cash flows are as tight as a belt, and fines only exacerbate the situation. What needs to be done now is to provide enterprises with financial support, not to bleed them dry.

Secondly, avoid too much preferential treatment. We are all major taxpayers and contributors to society; why should there be a hierarchy?

Thirdly, reduce the barriers and relax market access. Don't make the process of registering a company or applying for projects as complicated as a labyrinth. Simplify the approval process, allowing enterprises to easily enter the market and compete fairly. Further simplify the process of registering companies and applying for projects to create a fair competitive market environment.

The most important thing is to dismantle the obstructive "rolling shutter doors," "glass doors," "spring doors," and "revolving doors." Regardless of the type of enterprise, when it comes to obtaining resources, obtaining permits, conducting business, accepting government orders, and participating in bidding, everyone should be treated equally and compete fairly.

Fourthly, allow the financial service system to compete fully. By the end of 2022, the loan balance of small and micro enterprises in Taizhou accounted for 48.63%, which is a benchmark nationwide. Moreover, the non-performing loan rate is only 0.19%, which is of high quality. The three city commercial banks in Taizhou, in 2022, provided loans to small enterprises accounting for more than 75%, serving 1.223 million households, with an average of 436,000 yuan per household. Although these three banks also have state-owned shares, they are not much, and the government just helps from the side without interfering.

Because the market is open enough, Taizhou's city commercial banks dare to think and act boldly, creating many innovative loan methods and launching a variety of financial products suitable for small businesses. This has made the large banks sit up and take notice, starting to focus on small enterprises. Now, large banks mainly focus on large orders over 500,000 yuan, while city commercial banks focus on small orders between 350,000 and 500,000 yuan.

The government only needs to support from the side, and the market can be lively on its own, and small business loans can be prosperous.

Finally, policies must have a consistent direction, not changing with the wind, to give the hearts of private enterprise owners a fixed point.

Private enterprise owners are most afraid of policy direction changes, blowing east today and west tomorrow. How can business be done in such an environment?Today's documents promote development, and tomorrow's documents prevent expansion. Although the original intention is to improve market rules, these documents are often implemented as "laws" in the end. However, the more "flexible" the formulation of "rules" is, the more people will be "at a loss."

Look at Boss Yu, who has made the education and training industry a leader. With a single document, it was directly reduced to ashes. Take electric scooters as another example. With a single order, they are directly banned from the road, causing heavy losses to the invested companies and those producing electric scooters. This uncertainty has made private enterprises pay a huge price.

Without a certain and open "law and regulation," private entrepreneurs will be hesitant and dare not do things. Because even if you do well, you can't resist a single policy order. Today you are in the limelight, and tomorrow a policy order can make you vanish.

Today, a document can promote our development, but will you come up with another document tomorrow to prevent the disorderly expansion of capital? This concern undoubtedly greatly undermines the confidence of private entrepreneurs.

Therefore, on the basis of improving regulations and treating everyone equally, we should give private enterprises enough "free play" space, less trouble, no trouble, and protect the personal and property safety of entrepreneurs, allowing them to start businesses with peace of mind and dare to innovate. The law should stand on their side, and not use administrative and criminal means to intervene in economic disputes at will. Seizure and freezing of property should also have a limit and not be arbitrary.

We must understand that private enterprises are the "catfish" of the market. They have keen sense of smell and quick response, and they know best what the public needs and what the market lacks. The most important thing for the government is to play the role of a "night watchman," intervene less, guide more, and formulate fair game rules. The rest should be left to private enterprises to play.

Of course, it's not about letting things go, but creating a fair competitive environment, allowing private enterprises to compete freely in the market, just like a gardener providing suitable soil and climate for flowers and plants, rather than stipulating the shape and color of each flower.Small and medium-sized enterprises (SMEs) are the little giants of the market economy. Although they are not large in size, they are full of energy and have made significant contributions to tax revenue and employment. However, they are also like small boats in a storm, vulnerable and at risk of capsizing at any moment.

The survival challenge for SMEs is a war without smoke, but it concerns the smooth flow of the entire market's lifeblood.

Remember the old saying: "Confidence is more precious than gold." Once SMEs encounter setbacks, rebuilding confidence is more difficult than anything else.

The government and enterprises are both participants and examinees, and they must all show their true skills. From financing issues to market access, from tax reduction and fee reduction to policy support, every move must be accurate and in place, not only to solve the urgent problem at hand but also to pave a broad road for the long-term development of enterprises.

Emergency aid is the first step, and there must be a determination to cure the disease by removing the root cause. SMEs need more than just a "stimulant"; they need a comprehensive "life-saving drill"!

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