China Unveils Five-Year Plan to Support SMEs, Jobs and Innovation

China has introduced a five-year plan aimed at strengthening small and medium-sized enterprises (SMEs), with a focus on employment, innovation and economic growth.

The plan, jointly released by 10 central government agencies, calls on local authorities to provide greater support to SMEs operating in emerging industries. It also proposes allowing these companies to take part in major national science and technology programmes and using government funding to encourage more investment in early-stage businesses.

The initiative also supports Beijing’s wider efforts to expand digitalisation and the use of artificial intelligence. The plan describes SMEs as an important contributor to innovation, employment, livelihoods and economic resilience.

China is placing greater emphasis on technological self-reliance and supply-chain resilience amid competition with the United States. Specialised smaller companies known as “little giants” have received particular attention under this strategy.

According to figures cited from the OECD, SMEs contribute around 60% of China’s economic output, 70% of technological innovation, 80% of urban employment and half of tax revenue.

Under the new plan, China aims to increase SME revenue per employee by around 15% by 2030. It also targets 22,000 “little giants”, 600 national SME industrial clusters and annual R&D spending growth of more than 8% among industrial SMEs.

The plan includes stronger backing for startups in strategic areas such as new energy, new materials, robotics, quantum technology, brain-computer interfaces and embodied AI. It also calls for expanded government-supported venture financing and long-term “patient capital”.

China further plans to increase bank lending available to SMEs and improve their access to bond and equity markets. A second phase of the national SME development fund will also be launched to direct additional capital towards smaller businesses.