Illustration: Liu Xidan/GT

In the first quarter of 2025, the development index for Chinese small and medium-sized enterprises (SMEs) reached 89.5, the highest since 2020, China Central Television (CCTV) reported on Thursday. This figure, unveiled by the China Association of Small and Medium Enterprises (CASME), not only signifies the positive trajectory of China's SMEs but also underscores the resilience of the Chinese economy amid considerable international economic uncertainties, including those sparked by US tariffs.

Ma Bin, the executive vice president of the CASME, was quoted by CCTV as saying that a raft of incremental pro-growth policies implemented last year has consistently yielded benefits, boosting the country's economic growth. These measures, combined with the revitalization of holiday-inspired consumption and other factors, helped to enhance the production and operations of SMEs in the first quarter of 2025.

SMEs make a substantial contribution to China's economy. In the face of a complex external environment, the healthy growth of SMEs, among other factors, is a testament to the strong resilience of China's economy.

First, SMEs play a crucial role in job creation. According to an article by Zhou Xiaoguang, a researcher at the Institute of Population and Labor Economics at the Chinese Academy of Social Sciences, SMEs in China account for more than 80 percent of total employment. The relationship between SMEs and employment in the country is deeply interconnected: a stable SME sector is essential for maintaining a stable job market. Recent data from the CASME indicate a notable increase in labor demand from SMEs in the first quarter, with the demand index rising to 98.2, a 0.6-point increase from the previous quarter. This upward trend provides a solid foundation for the stability of China's employment landscape.

Second, SMEs are a significant driving force behind innovation. Some statistics show that China has about 500,000 technology-based SMEs, 465,000 high-tech enterprises, and 215,000 innovative SMEs. These businesses are crucial sources for the development of new technologies, industries and business models in China. In recent years, technological innovations in China have had a substantial influence on economic development. The stable development of SMEs is beneficial for ensuring a vibrant landscape for technological innovation in the country.

Third, SMEs are often quick to pick up on market demand and trends. Recent data from the CASME showed that in the first quarter, the market index reached 81.5, an increase of 0.7 points from the previous quarter. Out of eight industries surveyed, five saw their market indices rise. Notably, the information transmission and software industry, social services, wholesale and retail, and transportation sectors experienced significant growth, each by more than one point. This highlights the vast potential of the Chinese market. When facing challenges from external demand, China's robust domestic market can provide a foundation for sustained economic growth.

To support the expansion and advancement of the private sector, and to encourage high-quality growth among SMEs, China has rolled out a number of measures this year. For example, in March, the State Council, the cabinet, announced measures aimed at assisting commercial banks and other financial institutions to boost their lending to SMEs, while also working to lower the overall financing costs for these businesses.

Recently, the US has been wielding the tariff stick against its trade partners, including China, under various pretexts, which has severely affected the stability of the global economic order. This inevitably places pressure on the global economy. Chinese SMEs, particularly those engaged in export-oriented activity, may also feel these pressures and challenges. However, it is important to recognize that Chinese SMEs have a solid foundation for development and are on a stable upward trajectory, which provides them with a buffer against external risks.

As China's vast market potential continues to be tapped, and with the implementation of policies aimed at stabilizing the economy and foreign trade, Chinese SMEs are expected to achieve stable development. Additionally, these enterprises possess greater flexibility compared with larger corporations, enabling them to adapt more swiftly to changing circumstances.

China has tens of millions of SMEs, forming a substantial force. Their stable development will provide immense potential and resilience for the overall Chinese economy.

The author is a reporter with the Global Times. bizopinion@globaltimes.com.cn