Millions Of Small-Scale Chinese MSMEs Shutting Down

About 4.37 million of China’s smallest businesses permanently shut their doors in the first 11 months of the year – more than three times the number of new ones that opened during the same time, according to data obtained by the South China Morning Post (SCMP).

Photo Insert: A street market in Shanghai, China

Figures from public registry tracking firm Tianyancha also show that, for the first time in two decades, the rate of deregistration among micro and small businesses surpassed the number of those newly registered in China, Ji Siqi reported for SCMP.

However, Ji reported that an ex-finance minister has said official economic indicators failed to paint an accurate picture of the economy, and publicly available data did not show how many firms vanished.

Only 1.32 million new micro and small firms opened in China during the first 11 months of this year, compared with 6.13 million last year. In China’s industrial sector, “small” firms are those that employ fewer than 300 people and earn less than 20 million yuan a year.

The data are particularly relevant given that Beijing considers the nation’s more than 40 million micro and small firms the “backbone” of China’s private sector, underpinning the national economy.

Their struggles are a reflection of broader economic headwinds that analysts say could see gross domestic product (GDP) drop below 4 percent in the fourth quarter of this year.

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