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China Eyes Setting Up 60 Billion Yuan Worth of Fund to Boost Small Firms

| Sep 03, 2015 07:32 AM EDT

A total of 60 billion yuan will be allotted to help the growth of small enterprises.

The Chinese government is eyeing to set up 60 billion yuan worth of national fund to boost the development of small firms, according to a decision made during a State Council executive meeting on Tuesday.

The fund is a supplement to the measures that aim to decrease initial capital requirement for fixed-asset investment endeavors, the decision added.

In a circular released after the meeting, the central government plans to invest an initial capital of 15 billion yuan in the fund. Meanwhile, the remaining amount will be raised from local governments, financial institutions, and private and state-owned companies.

Though geared to mainly "support small and micro-sized businesses in the initial stage as seed investment," the fund's raising, establishment, management and revenue distribution will still be held in accordance with market-oriented principles.

The circular further said that private investors in the fund will be prioritized over government-backed ones in terms of dividends distribution. This is to attract more private capital to increase the development of small enterprises.

During the meeting, officials have also decided to lower the initial capital requirement for fixed-asset investment projects to boost such ventures and hence encourage economic growth.

For projects related to port construction, airports and inland navigation, the initial capital will be decreased from 30 to 25 percent.

For those related to railway, highway and urban subways construction, it will go down from 25 to 20 percent.

Meanwhile, capital for projects involving corn deep-processing project will be lowered to 20 percent from the previous 30.

Other significant projects will also be open to more flexible terms, the State Council further decided.

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