China's experience in supporting SMEs in the reopening of economies

CAF -Development Bank of Latin America- and  China's Center for International Knowledge on Development (CIKD) organized a webinar titled “The SME Economy during the pandemic: Safeguards and Policies to prevent risks when reopening economies, extrapolating China's experience of to LATAM”, prominent Chinese experts and CAF's senior management participated and the audience included public authorities from the health and SME sectors in CAF's shareholder countries.

Julián Suárez, Vice President of Sustainable Development, explained that there are a series of experiences in China regarding measures to protect the population and preserve SME activity that could be useful for Latin America. "Although contexts are different, the lessons that the region can learn from China will surely allow us to face the challenges posed by the pandemic on better terms," said Suárez.

Sen Gong, CIKD's Executive Vice President, explained that the measures adopted by China to preserve the economy of SMEs contemplated a balance between the reduction of activity and the protection of employees; business continuity through online sales and new technologies; or a temporary reduction of social security contributions. The success of these measures, said Gong, was that they were coordinated by the central and local governments, which created working groups to overcome specific aspects.

"The greatest impact COVID-19 had in China was on consumption," said Wang Wei, Director General of the Research Institute of Market Economy, Development Research Center (DRC) of the State Council of China. Wei explained that during the first months logistics costs increased due to containment measures, and that this had impacted the country's SMEs.

For his part, Jorge Arbache, CAF's Private Sector Vice President, explained some measures that are being implemented in Latin America to reduce the impact of the pandemic on SMEs. "There is a consensus that recovery will be slow, which could have an impact on the region's value chains," said Arbache. In this regard, he assured that CAF is promoting a series of actions, such as innovative financing and guarantee instruments, internationalization, capacity building and digital transformation, to protect SMEs in the region. In parallel, work is being done with national development banks to establish local SME support plans.

As regards the risks implicit in opening  the economies, Wang Xiongjun, CIKD's Vice-President, called for mass testing to reinforce the prevention of new cases, the implementation of personal and social protection measures, and the gradual reopening of companies.

This Webinar underlines CAF's special interest in providing its shareholder countries with tools to face the different challenges, in this case for the SME sector, derived from the COVID-19 pandemic, as well as an opportunity to promote institutional cooperation between CAF and the CIKD for the benefit of Latin America and the Caribbean.