Move by Beijing part of package of measures to ease financing difficulties and reduce costs for SMEs as global economic uncertainty worsens.

HK central government will set up a 15 billion yuan (HK$18.45 billion) fund as part of a package of measures to avoid widespread closures of small and medium-sized enterprises (SMEs) amid the uncertain global economic climate.

Zhu Hongren, chief engineer at the Ministry of Industry and Information Technology, yesterday said the measures would involve monetary incentives to ease financing difficulties for tens of millions of SMEs, reduce their costs and help them climb the value chain.

The measures follow recently introduced fiscal initiatives such as cuts in administrative fees and corporate tax rates.

"With concerted efforts in various government departments, SMEs and small companies should be free from a funds crunch and the risk of going bust," Zhu said. "

But the existing uncertainty in the global economic landscape and the higher growth rate last year mean industrial output may slow further in the first quarter."

Growth in industrial output is expected to be hit by slowing demand overseas, weaker domestic consumption, and the big rises in wages and operating costs in the second half of last year.

Industrial output grew 12.8 per cent year on year in December compared with a 12.4 per cent rise in November and a 13.2 per cent increase in October. On a full-year basis, industrial output grew 13.9 per cent last year, compared with growth of 15.7 per cent in 2010.

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