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In Spite of COVID-19 Pandemic, Newly-Established Enterprises Steadily Increased whereas Registered Capital Revealed a Significant Decline (No.65, 2021)


By Zhou Jianqi, Enterprise Research Institute, DRC, Li Chengjian, Department of Macroeconomic Research, DRC & Qu Qingchao, the Economic Committee of Beijing Municipal Committee of Chinese People’s Political Consultative Conference

Research Report, No.65, 2021 (Total 6130) 2021-3-22

Abstract: Based on the increasing number of newly-established enterprises and their registered capital in 2020, this paper gives an analysis of the impact induced by COVID-19 pandemic on the performance of newly-established enterprises. Last year, the number of newly-established enterprises in China grew steadily, whereas their registered capital dropped by around 21.3 percent year on year. The registered capital of newly-established enterprises in Hainan and Guangdong provinces as well as in Guangxi Zhuang Autonomous Region saw the biggest drop, with a total reduction of 98.2 percent. The sharpest decline of registered capital of newly-established enterprises loomed up in real estate industry in Hainan, the scientific research and technical service industries in Guangdong, and the architecture industry in Guangxi. Backed by effective policies to ensure stability on six fronts (see note 1) and to maintain security in six areas (see note 2) and bolstered by the strong resilience of market entities, the business performance of newly-established enterprises became resumed in a short period of time. However, due to the impact of COVID-19 pandemic, the profitability of enterprises went down, affecting the input of newly-registered capital. By addressing the structural issue, the input volume of newly-registered capital of enterprises has taken a turn for the better. Efforts are needed to continue implementing the above-mentioned policy measures in a more targeted and positive manner so as to optimize and upgrade industrial structure.

Keywords: registered capital of newly-established enterprises, sharp decline, major causes, conclusions and policy options

Note 1: The six fronts refer to employment, the financial sector, foreign trade, foreign investment, domestic investment and expectations.

Note 2: The six areas refer to job security, basic living needs, operations of market entities, food and energy security, stable industrial and supply chains and the normal functioning of primary level governments.