(Yicai) Jan. 17 -- With many small and medium-sized enterprises having urgent financing needs due to the challenging economic environment, a number of new support measures have been floated at the annual meeting of Shanghai’s legislature.

Due to economic downturns, policy adjustments, and other factors, some companies are unable to go public as planned or see their operating performances deteriorate, said Ji Xinhua, a delegate to the Shanghai Municipal People's Congress and chairman of cloud storage and data analytics firm UCloud Technology.

The rigid exit schedule of state-owned capital funds in these circumstances can lead to tight liquidity or even breaks in the capital chain for these companies, Ji said, and so he suggested a deferred exit mechanism for these funds that would allow businesses to go on receiving funding during critical periods, helping them weather difficulties.

Ji also proposed that some of the national research funding for universities and research institutions could be diverted toward SMEs, particularly those in tech innovation.

Zhu Zhengwei, another deputy representing private businesses, floated the idea of allowing companies in difficulty to apply for a temporary deferral of value-added tax payments. He believes that given the ongoing global economic downturn and structural adjustments in the Chinese economy, there is not enough dynamism in the consumer market.

The period around Chinese New Year is often a time when most private companies experience the tightest cash flow. To ease the pressure, Zhu suggested that firms with a large amount of overdue accounts receivable in the first quarter should be treated more flexibly, such as paying VAT on a quarterly rather than a monthly basis.

Wu Jian, another deputy and Party secretary at Duan & Duan Law Firm, proposed creating a capital guidance fund. This government-led and market-oriented fund would guide financing into high-risk, high-potential innovative sectors.

Editor: Tom Litting