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Law of the People's Republic of China on
Promotion of Small and Medium-sized Enterprises
(Adopted at the 28th Meeting of the Standing Committee of the Ninth
National People's Congress on June 29, 2002)
Contents
Chapter I General Provisions
Chapter II Funding
Chapter III Support for Establishment of Enterprises
Chapter IV Technological Innovation
Chapter V Market Development
Chapter VI Public Services
Chapter VII Supplementary Provisions
Chapter I General Provisions
Article 1 This Law is enacted for the
purpose of improving the business environment for small and medium-sized
enterprises, promoting their sound development, creating more job
opportunities in both urban and rural areas, and giving
play to the important role of such enterprises in national economic and
social development.
Article 2 For purposes of this Law, small and medium-sized enterprises
refer to the different forms of enterprises under
different ownerships that are established within the territory of the
People's Republic of China according to law, that help
to meet the social needs and create more job opportunities, that comply
with the industrial policies of the State and that
are small and medium-sized in production and business operation.
The criteria for determining small and medium-sized enterprises shall
be laid down by the department under the
State Council in charge of work in respect of enterprises, on the basis
of the number of employees, volume of sale, total
assets, etc. of an enterprise and in light of the characteristics of
different trades and shall be submitted to
the State Council for approval.
Article 3 With regard to small and
medium-sized enterprises, the State applies the principles of active
support, strong
guidance, perfect service, lawful standardization an guaranteed rights
and interests, in order to create a
favorable environment for their establishment and development.
Article 4 The State Council shall be
responsible for formulating policies regarding small and medium-sized
enterprises and make overall planning for their development.
The department under the State Council in charge of work in respect of
enterprises shall arrange for the implementation of
the State policies and plans concerning the small and medium-sized
enterprises, making all-round coordination and
providing guidance and services in the work regarding such enterprises
throughout the country.
The related departments under the State Council shall, according to
the policies and overall planning of the State
for small and medium-sized enterprises and within the scope of their
respective functions and responsibilities, provide
guidance and services to such enterprises.
Local people's governments at or above the county level, the
administrative departments under them in charge of work in
respect of enterprises and other departments concerned shall, within the
scope of their respective functions and
responsibilities, provide guidance and services to small and
medium-sized enterprises located within their respective
administrative areas.
Article 5 The department under the State
Council in charge
of work in respect of enterprises shall, according to the
industrial policies of the State and in light of the
characteristics of the small and medium-sized enterprises and
the conditions of their development, determine the key ones
for support by formulating a catalogue of small and
medium-sized enterprises to be provided with guidance for
their industrial development or by other means, in order to
encourage the development of all such enterprises.
Article 6 The State protects the lawful investments made by
small and medium-sized enterprises and their investors, as
well as the legitimate profits earned from the investments. No
unit or individual may infringe upon the property and lawful
rights and interests of such enterprises.
No unit may, in violation of laws and regulations, charge
fees to or impose fines on small and medium-sized enterprises,
nor collect money or things of value from them. The
enterprises shall have the right to refuse to make the payment
and the right to report and accuse violations of the
provisions mentioned above.
Article 7 Administrative departments shall safeguard the
lawful rights and interests of small and medium-sized
enterprises, protect their right to participate in fair
competition and transaction according to law, and they may not
discriminate against the enterprises or add unequal conditions
to their transactions.
Article 8 small and medium-sized enterprises shall observe
State laws and regulations governing occupational safety,
occupational health, social security, resources, environment
protection, product quality, public finance, taxation,
finance, etc., and manage business according to law, and they
may not infringe upon the lawful rights and interests of their
employees or impair public interests.
Article 9 small and medium-sized enterprises shall observe
professional ethics, abide by the principle of good faith,
work hard to raise their business level and increase the
ability to develop themselves.
Chapter II
Funding
Article 10 In the budget of the Central Government there
shall be a heading for small and medium-sized enterprises,
under which to arrange special funds for supporting the
development of such enterprises.
Local people's governments shall, in light of actual
conditions, provide financial support to small and
medium-sized enterprises.
Article 11 The special funds provided by the State for
supporting the development of small and medium-sized
enterprises shall be used to promote the establishment of a
service system for such enterprises, to carry out work in
their support, to supplement their funds for development and
to support their development in other areas.
Article 12 The State establishes development funds for small
and medium-sized enterprises, which are composed of the
following:
(1) the special funds arranged in the budget of the Central
Government for supporting the said enterprises;
(2) profits yielded by the funds;
(3) donation; and
(4) others.
The State encourages donations to the development funds for
small and medium-sized enterprises through taxation policies.
Article 13 The State development funds for small and
medium-sized enterprises shall be used to support the
following fields of endeavor:
(1) instructions on and services for establishment of
enterprises;
(2) establishment of a credit guaranty system for the
enterprises;
(3) technological innovation;
(4) encouragement for their specialization and their
cooperation with large enterprises;
(5) personnel training and information consultancy, etc.
provided by the service institutions for the enterprises;
(6) creation of international market;
(7) cleaner production; and
(8) others.
The administrative measures for establishment and use of the
development funds for small and medium-sized enterprises shall
be formulated separately by the State Council.
Article 14 The People's Bank of China shall give better
guidance in credit policies and help improve the financing
environment for small and medium-sized enterprises.
The People's Bank of China shall give more vigorous support
to small and medium-sized financial institutions and encourage
commercial banks to readjust their credit structure and
provide greater credit support to small and medium-sized
enterprises.
Article 15 All financial institutions shall provide
financial support to small and medium-sized enterprises, make
efforts to improve financial service, change their style of
service, enhance their awareness of the importance of service
and improve service quality.
All commercial banks and credit cooperatives shall improve
credit management, expand the areas of services and develop
financial products that are suited to the development of small
and medium-sized enterprises, readjust their credit structure,
and provide the enterprises with such services as loans,
balancing of accounts, financial consultancy and investment
management.
State policy-oriented financial institutions shall, within
their business scope, provide financial services to small and
medium-sized enterprises.
Article 16 The State takes measures to broaden the channels
of direct financing for small and medium-sized enterprises and
gives them active guidance in their efforts to create
conditions for direct financing through various ways as
permitted by laws and administrative regulations.
Article 17 The State, through taxation policies, encourages
various kinds of risk investment institutions established
according to law to increase investment in small and
medium-sized enterprises.
Article 18 The State promotes the development of the credit
system for small and medium-sized enterprises by establishing
a collection and assessment system of credit information, in
order to socialize the inquiry about and the exchange and
sharing of credit information concerning such enterprises.
Article 19 People's governments at or above the county level
and related departments shall promote and arrange for the
establishment of a credit guaranty system for small and
medium-sized enterprises, encourage credit guaranty for them
and create conditions for their financing.
The administrative measures for credit guaranty for small
and medium-sized enterprises shall be formulated separately by
the State Council.
Article 20 The State encourages all kinds of guaranty
institutions to provide credit guaranty to small and
medium-sized enterprises.
Article 21 The State encourages small and medium-sized
enterprises to enter into different forms of mutual-help
financing guaranty according to law.
Chapter III
Support for Establishment of Enterprises
Article 22 The government departments concerned shall
actively create conditions to provide necessary and suitable
information and consultancy and, when working out plans for
urban and rural construction, make rational arrangements for
the necessary places and facilities to meet the needs for the
development of small and medium-sized enterprises and support
the establishment of such enterprises.
Where unemployed or disabled establish small and
medium-sized enterprises, the local government shall actively
support them, provide conveniences and better guidance.
The government departments concerned shall take measures to
broaden channels for the small and medium-sized enterprises to
employ graduates of colleges and specialized secondary
schools.
Article 23 The State supports and encourages, through
relevant taxation policies, the establishment and development
of small and medium-sized enterprises.
Article 24 With regard to the small and medium-sized
enterprises that are established by unemployed persons or that
employ laid-off workers in the year of their establishment,
the number of whom reaches the percentage fixed by the State,
the ones that use new and high technologies and conform to
State policies for supporting and encouraging the development
of such enterprises the ones that are established in minority
ethnic areas and poverty-stricken areas, and the ones that
provide jobs to disabled persons, the number of whom reaches
the percentage fixed by the State, the State reduces the rate
of tax or exempts them from income tax during a certain period
of time, and adopts preferential taxation policies.
Article 25 Local people's governments shall, in light of
actual conditions, provide persons who establish enterprises
with policy consultancy and information services concerning
industrial and commercial administration, public finance,
taxation, financing, labor, employment, social security, etc.
Article 26 Government departments in charge of enterprise
registration shall, in compliance with the statutory
requirements and procedures, handle registration for the small
and medium-sized enterprises established, increase their work
efficiency and provide conveniences to the registrants. They
may not impose preconditions for registration of enterprises
beyond the provisions of laws and administrative regulations;
and they may not collect fees beyond the ones or rates
specified by laws and administrative regulations.
Article 27 The State encourages small and medium-sized
enterprises, in accordance with the State policies for the use
of foreign funds, to introduce foreign investment and advanced
technology and management expertise and to establish
Chinese-foreign equity joint ventures and contractual joint
ventures.
Article 28 The State encourages individuals and legal
persons, in accordance with law, to take part in the
establishment of small and medium-sized enterprises by
investing their industrial property right, nonpatented
technology, etc.
Chapter IV
Technological Innovation
Article 29 The State formulates policies to encourage small
and medium-sized enterprises to develop new products and to
adopt advanced technology, manufacturing technique and
equipment to meet market needs and to improve product quality
and make technological progress.
When launching projects for technological innovation and
projects for technological updating in support of the products
of large enterprises, small and medium-sized enterprises may
enjoy the policy of discount interest on loans.
Article 30 The government departments concerned shall give
policy-related support to small and medium-sized enterprises
in terms of planning, land use and finance, promote the
establishment of different kinds of technical service
institutions and establish centers for advancing the
productive forces and bases for creating science- and
technology-oriented enterprises, in order to provide small and
medium-sized enterprises with services relating to
technological information, consultancy and transferring and
services for the development of products and technologies, and
to help promote the transformation of scientific and
technological achievements and upgrade the technology and
product of the enterprises.
Article 31 The State encourages technological cooperation,
development and exchange between small and medium-sized
enterprises on the one hand and research institutions and
institutions of higher education on the other, in order to
promote the industrialization of scientific and technological
achievements and actively develop small and medium-sized
enterprises that make use of scientific and technological
achievements.
Chapter V
Market Development
Article 32 The State encourages and supports large
enterprises to establish, on the basis of resources allocation
by the market, stable relations of cooperation with small and
medium-sized enterprise in respect of the supply of raw and
semi-processed materials, production, marketing, and
technological development and updating, in order to help
promote the development of small and medium-sized enterprises.
Article 33 The State gives guidance to, promotes and
regulates the restructuring of the assets of small and
medium-sized enterprises through merge, purchase, etc., in
order to optimize the allocation of resources.
Article 34 When purchasing goods or service, the government
shall give first priority to small and medium-sized
enterprises.
Article 35 The government departments and institutions
concerned shall provide guidance and assistance to small and
medium-sized enterprises to stimulate the export of their
products and promote their economic and technological
cooperation and exchange with other countries.
The policy-oriented financial institutions of the State
concerned shall, by means of providing loans for import and
export, export credit insurance, etc., support small and
medium-sized enterprises in their efforts to develop market
abroad.
Article 36 The State formulates policies to encourage
qualified small and medium-sized enterprises to invest abroad,
participate in international trade and develop international
market.
Article 37 The State encourages the service institutions for
small and medium-sized enterprises to hold exhibitions and
fairs for their products and to conduct information
consultancy activities.
Chapter VI
Public Services
Article 38 The State encourages all sectors of the society
to establish and improve the service system for small and
medium-sized enterprises and to provide them with services.
Article 39 The government shall, in light of actual needs,
support the institutions established in the service of small
and medium-sized enterprises and see that they provide
top-notch services to the enterprises.
The service institutions for small and medium-sized
enterprises shall make full use of computer networks and other
advanced technologies to gradually establish and improve the
information service system opening to the entire community.
The service institutions for small and medium-sized
enterprises shall contact the various kinds of public
intermediary agencies and encourage them to serve such
enterprises.
Article 40 The State encourages the various kinds of public
intermediary agencies to provide the small and medium-sized
enterprises with such services as instructions on
establishment of enterprises, business consulting, information
consultancy, marketing, investment, financing, credit
guaranty, property right transaction, technological support,
bringing in of talents, personnel training, cooperation with
other countries, exhibitions, fairs and legal advice.
Article 41 The State encourages related institutions and
institutions of higher education to train managerial,
technical and other personnel for small and medium-sized
enterprises, in order to help raise the enterprises' level of
marketing, management and technology.
Article 42 The self-regulating trade organizations shall
actively serve the small and medium-sized enterprises.
Article 43 The self-regulating organizations in charge of
the self-restricting and self serving small and medium-sized
enterprises shall safeguard the legitimate rights and
interests of the enterprises, express their suggestions and
requirements, and serve them in market development and
increase of their management ability.
Chapter VII
Supplementary Provisions
Article 44 The provinces, autonomous regions and
municipalities directly under the Central Government may, in
light of the conditions of the local small and medium-sized
enterprises, formulate measures for implementation of this
Law.
Article 45 This Law shall go into effect as of January 1,
2003.
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