The number of medium and small businesses exceeded 40 mln

Chinanews, Beijing, September 27 – The number of medium and small businesses in China has exceeded 40 million, taking up 99.8% of the enterprises in the country, to become a main force boosting the Chinese economy. The output of these businesses has taken up nearly 55% of the country’s GDP, and they contribute 46% tax revenue to the state. They are very innovative, too, for more than 75% of China’s innovative products and new patents are the fruit of their labor. However, medium and small businesses are not perfect. They have difficulties in financing, social security system, management, and exploration of new markets, which require the attention of the whole society.

After reading this post one realizes that a question posted by L.Kotlikoff et al. (kotlikoff_will_china_eat_our_lunch.pdf{#p130} ) in a different context Will China eat our lunch? is a very valid question indeed. Kotlikoff et al. results are optimistic as China becomes world saver and contributes to world prosperity, which in equlibrium raises western wages. But if one looks at what Europe is doing to remain competitive (spending half of its budhet on agriculture subsidies, failing to revive its “zombie” Lisbon agenda) one may begin to worry that substitution effect will dominate income effect in the case of Europe.