A Historical Review of Chinese Business Policies and the Development of SMBs

The role that small and medium businesses play in China's economy is significant. By the end of 2009, they accounted for 99. 8% of the country's enterprises, 60% of GDP and 75% of job opportunities. However, the development of SMEs in China has a very close relationship with the perspective the government has of the SME sector. This study provides a historical review of Chinese business policies from the Qin Dynasty (221 similar to 206 B. C.) to the present, which includes eleven major dynasties and periods. Business policies have moved in cycles of tightening and loosening. China's economy has always gained significant growth when the business sector was favoured by the government. The study also finds that in recent Chinese history, merchants gradually gained status and have increasing freedom to run their businesses independent from government control. Influential factors such as Chinese history, culture, and macro and micro environments can have an impact on the development of Chinese SMBs. The findings provide a historical context from which the present Chinese government can extract lessons because from the perspective of historical development, the People's Republic of China (PRC) can be viewed as the current period in Chinese history. Therefore, this paper suggests that it is important for the Chinese Communist Party (CCP) to learn from the past and formulate proper principles, policies, and regulations to increase people's living standards and provide free, fair and stable social conditions, which can help the growth of the business sector and therefore the Chinese economy.