China has unveiled a five-year development plan for “little giants” and other emerging companies, promising stronger support for employment and innovation as it seeks to sustain economic growth and achieve greater technological independence.

The plan, released on Thursday, September 3, was jointly issued by 10 central government agencies. It calls on local authorities to provide greater backing for small and medium-sized enterprises operating in emerging industries.

Under the plan, eligible companies will be given opportunities to participate in major national science and technology programmes. Government funds will also be used to help attract additional private capital into early-stage businesses.

The measures form part of Beijing’s wider effort to accelerate digitalisation and AI adoption.

“SMEs are an important force for driving innovation, promoting employment and improving livelihoods, and an important source of economic vitality and resilience,” the plan said.

China has intensified its pursuit of technological self-sufficiency and stronger supply-chain resilience amid its rivalry with the United States. As part of that strategy, Beijing has placed particular emphasis on specialised smaller companies known as little giants.

According to the OECD, small and medium-sized enterprises contribute about 60% of China’s economic output and account for 70% of technological innovation, 80% of urban employment and half of tax revenue.

The newly released plan sets several targets for 2030. China aims to increase revenue per employee at SMEs by about 15%, raise the number of little giants to 22,000, expand national SME industrial clusters to 600 and increase annual research and development spending by industrial SMEs by more than 8%.

The government also pledged increased backing for startups operating in strategic areas. These include new energy, new materials, robotics, quantum technology, brain-computer interfaces and embodied AI.

In addition, China plans to expand government-backed venture funding and promote “patient capital”, referring to long-term investment designed to provide businesses with more sustained financial support.

The plan also provides for increased bank lending to SMEs and improved access to bond and equity markets. China will further launch the second phase of its national SME development fund, with the aim of directing more capital towards smaller companies.

Source: Reuters