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在线翻译:
szdaily -> Business
Small firms face thinning profits amid credit woes
    2017-July-4  08:53    Shenzhen Daily

THE struggles of China’s small and medium-sized firms have grown so acute that many are expected to become unprofitable or even go belly-up this year, boding ill for an economy running short on strong growth drivers.

The companies — which account for more than 60 percent of China’s US$11 trillion gross domestic product and employ four-fifths of the workforce — have entered the most challenging funding environment in years as the government cracks down on easy credit to contain a dangerous debt buildup.

Many of the firms — mostly in the industrial, transport, wholesale, retail, catering and accommodation sectors — are already grappling with soaring costs, fierce competition and thinning profits.

The strains faced by small and medium-sized enterprises (SMEs) are expected to grow more visible as China deflates a real estate bubble and eases infrastructure spending to dial back its fiscal stimulus.

“Many SMEs probably won’t make it this year,” said Wang Cong, manager of a struggling mid-sized logistics company in the eastern city of Zibo.

“Banks have started pulling the plug, just as competition has become a lot more intense.”

Central bank data shows broad M2 money supply grew 9.6 percent in May from a year earlier, the slowest since at least January 1996.

Cumulatively, combined trust loans, entrusted loans and undiscounted banker’s acceptances — sources of funding for shadow banking activities that largely involve SMEs — fell to 28.9 billion yuan (US$4.25 billion) in May from 177 billion yuan in April.

The lack of funds is taking a toll. Business activity in the SME sector weakened for the third straight month in June to hit the lowest in 16 months, a Standard Chartered survey tracking more than 600 Chinese SMEs found.

The market pressures have led to an increase in unemployment, and weaker demand is expected to keep weighing on the labor market this year, the survey noted.

“Our profit has thinned to the point where I don’t think any more drop could be sustainable,” said Yu Zhihao, who runs a wood wholesale business in China’s northeastern port city of Tianjin and has seen his gross margins contract by a quarter in the past year.

For State-owned enterprises, growth in financing costs on average accelerated to 5.5 percent in May from 0.5 percent in February, said Jonas Short, who heads the Beijing office at investment bank Sun Hung Kai Financial (SHKF).

For smaller businesses lacking strong collateral, funding is even more expensive — if they can find it.

“It’s pretty clear, financial expenses have skyrocketed since the decision to increase interbank rates over the New Year,” said Short.

Many SMEs appear reluctant to expand production even as the government has introduced various favorable measures such as tax cuts to support their development, said Zhang Shaoping, analyst with the government-affiliated China Association of Small and Medium-sized Enterprises.(SD-Agencies)

 

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