Smaller Companies' Troubles Challenge China's Economic Policy

There are reports that without special government support in China, 40 percent of Wenzhou's small- to medium-sized businesses could face at least a partial halt of operations, with bankruptcy for some. Also, Chinese media report that profits for 35 export-oriented businesses of this size have fallen by 30 percent. With Wenzhou seen as an economic model for other cities, this may have important ramifications. Growing financial troubles among small- and medium-sized businesses pose an immediate challenge to China's tightening economic policy.