There's good news in a form of startups for China, which is reeling under the pressure of the slowdown in the economy. Giving much breath to China, over 10,000 startup firms are to take off every day. The majority are small enterprises.
The total number of startups set up so far stands about six million. The Chinese government is offering tax exemptions for small firms. The total tax benefits being extend to start-ups is estimated to be Yuan48.6billion ($9.93bn) for the first half of 2015 alone. The lending to small firms also rose 14.5 percent to Yuan16.2trillion ($2.7bn) till June. However, startups are facing challenges such as economy slowdown, rising costs, the slump in commodity prices, sluggish product market, etc.
As part of the new reforms for boosting the world's second largest economy, the Chinese government is extending all-round support to new entrepreneurship. This seems to be delivering positive results as the encouraging number of startups coming up in the country. According to the latest data pertaining to the period from March to August, six million firms have been registered with the government, according to Xin Guobin, Vice Minister of Industry and Information Technology.
China government has taken up new measures to improve job market by encouraging startups, which are projected to speed up the economy. The e-Commerce segment is booming in China and the government anticipates that this sector coupled with startups can give a new push to the economy.
The huge growth in the number of startups is also expected to enhance domestic consumption transforming the economy focus from export-driven to domestic consumption-based market. The gross domestic product (GDP) growth rate is hovering at seven percent.
With an objective of encouraging new small firms, the Chinese government has been offering tax sops and other concessions. The Chinese government has already slashed taxes and other fees for startups. As a result, the new small firms that got registered in 2015 saved to the tune of Yuan48.6billlion ($7.93bn) during the first half of this year.
Encouragingly, the lending activity is increasing in the slowing down economy. The huge number of new small firms has pushed lending up 14.5 percent this year. It's estimated that about Yuan16.2trillion ($2.7bn) amount has been lent to startups during the first half of the year.
International Monetary Fund (IMF) predicts that China's economy growth rate to come down to 6.8 percent in 2015 from 7.3 percent in 2014. The GDP growth rate is expected to further drop to 6.3 percent in 2016. Chinese economy's transformation from export-driven to domestic consumption-based one is not smooth as it was anticipated.
Join the Conversation