The Ministry of Finance (MOF) told Xinhua on Tuesday that 3.5 billion yuan (US$513 million) from the 2008 central budget will be used to support smaller companies that are having difficulties amid economic restructuring.

According to the MOF, this year's allocation will be 25 percent more than that of last year.

Small and mid-sized companies have become an important force in both economic growth and job creation in China. However, many are having financial difficulties as a result of domestic tightening policies at the same time as their export orders are falling amid a world slowdown.

Thus, during last Friday's Communist Party of China Political Bureau meeting to outline second-half strategies, helping smaller companies was deemed a priority, along with economic restructuring.

The MOF said it might improve fiscal and tax policies that affect small and mid-sized companies, to support their technical innovation and help them upgrade their product mix.

An innovation fund for high-tech smaller companies would get a central allocation of 1.4 billion yuan, up 27.3 percent from last year, the MOF said. The proportion of money used to improve public technical services and the start-up climate for smaller high-tech firms would increase from 20.9 percent last year to 23.6 percent.

The ministry said it also hoped to do more to support the development of small and mid-sized companies. Thus, it said, more public technical service agencies will be established to offer technical support to those companies, and a credit guarantee system would be established to improve their fund-raising environment.

(Xinhua News Agency July 29, 2008)