Editorial丨 Need to form a synergy to provide a better market and policy environment for small and medium-sized enterprises

The main goal of stabilizing the economy is to keep the main players in the market. As long as the main body of the market remains dynamic, it will have a steady stream of impetus for economic development.

A few days ago, Liu Guoqiang, deputy governor of the central bank, said that monetary policy should be sufficient, the monetary policy toolbox should be opened wider, the total amount of stability should be maintained, and the credit collapse should be avoided.

Since the second half of last year, the mainland's economic development has faced the triple pressure of demand contraction, supply shock and weak expectations, and the economic growth rate has gradually slowed down, especially the liquidity pressure on the real estate industry has led to poor macroeconomic expectations in the market. In this context, after the closure of the Central Economic Work Conference, various departments began to formulate various plans to boost economic growth and enhance market confidence, and the central bank has also adopted the policy of reducing the reserve requirement and cutting interest rates.

At present, the Ministry of Finance has issued a new special debt of 1.46 trillion yuan in 2022 in advance, and requires the issuance and use of it in the first quarter, and it is estimated that about 3.3 trillion yuan of special bonds will be invested in the infrastructure sector throughout the year. Important projects have been launched, both central and local. In the current environment, increased investment through government is the main way to stabilize economic growth. Relatively speaking, monetary policy can effectively curb inflation through tightening, but when it is loose, it does not necessarily stimulate economic growth. However, there is no so-called depression in China at this time, so by providing an easy credit environment, coupled with proactive fiscal policy, it can help reverse market expectations. Over the past 20 years, this counter-cyclical policy mix has always played its intended role.

Judging from economic data, China's industrial enterprises, including manufacturing, showed extraordinary prosperity last year. In 2021, the national industrial capacity utilization rate was 77.5%, an increase of 3.0 percentage points over 2020 and an increase of 0.9 percentage points over 2019, the highest level in recent years; From January to November, the profits of industrial enterprises above designated size increased by 38.0% year-on-year, with an average growth of 18.9% in two years; Last year, the total import and export trade was 39.1 trillion yuan, an increase of 21.4% year-on-year, and exports and imports were relatively balanced, both increasing by more than 20%.

This boom was aided by strong demand for exports as well as domestic investment. Taking the central enterprises that are mainly in the upstream as an example, in 2021, the operating income of central enterprises increased by 19.5% year-on-year, the profit increased by 30.3% year-on-year, and the net profit increased by 29.8% year-on-year.

In fact, what makes market expectations pessimistic is not the growth data, but the personal feelings. Since the epidemic, the service industry has been continuously impacted, and most people are engaged in the service industry in cities and can intuitively feel the impact. First of all, the epidemic has caused a greater impact on small and medium-sized service enterprises, and the epidemic prevention and control has allowed people to reduce consumption such as shopping, catering, tourism and entertainment, and some small and medium-sized enterprises are facing greater challenges; Secondly, the governance of related industries and the strengthening of supervision of finance, real estate and other industries have also caused the high-end service industry to decline in income and unemployment. These phenomena have created and transmitted some pessimistic atmosphere and unfavorable expectations to some people.

In addition, the sharp increase in the leverage ratio of Chinese residents in the past two years has not only limited the ability of the residential sector to continue to leverage house purchases, but also directly weakened the consumption capacity. While the real estate industry is suppressed, the weakening of the fiscal capacity of local governments will also reduce public consumption expenditure. The continuous impact of epidemic prevention and control and the debt pressure of residents and local governments have suppressed consumption, coupled with the impact of online shopping on the physical service industry, a large number of small and medium-sized service enterprises are facing survival pressure.

The main goal of our stable economy is to preserve the main body of the market, and if we keep the main body of the market, we will preserve the foundation of economic development. As long as the main body of the market remains dynamic, it will have a steady stream of impetus for economic development. Moreover, stabilizing the main body of the market is to stabilize employment, and small and medium-sized enterprises and individual industrial and commercial households provide more than 85% of urban jobs. Therefore, how to provide a better market environment for the service industry by expanding consumption is more important.

Traditionally, the practice of expanding infrastructure investment through government leverage can be directly reflected in GDP data, but it is difficult to benefit more industries and people through the trickle-down effect, mainly for upstream industrial enterprises. If the price of upstream commodities rises, it will have a certain impact on the manufacturing and service industries. As a result, the effect of rising consumption and private investment through government investment is weakening, and the market's sense of identification with this practice is also decreasing, further weakening its effect.

We need to work hard to stimulate consumption, strengthen the pull effect of financial subsidies, stabilize the governance expectations of the service industry, tap emerging consumption areas, avoid the phenomenon of one-size-fits-all epidemic prevention and control, and stimulate consumption by increasing holidays and organizing various cultural consumption activities under the condition of reasonable overall planning of epidemic prevention and control. It is necessary to effectively reduce the cost of living and marriage and childbirth for young people, develop vocational education and training and cultural and entertainment industries, continue to reform distribution policies, and improve social security. Pulling consumption is a systematic project in which all departments need to participate in the formation, and it is necessary to prevent the mutual constraints caused by the water control in Kowloon, and to form a synergy to provide a better market environment and policy environment for the development of small and medium-sized enterprises.