The profit rebound of China's small and medium-sized enterprises is lagging because of excess production capacity and reduced competitiveness under current tax burdens.

 

And SMEs may see further contraction in the near term, according to the China Association of Small and Medium-sized Enterprises.

 

Its Small and Medium-sized Enterprises Development Index, an indicator that shows the SMEs' operational situation in eight industries, hit 87.5 in the third quarter, its lowest level since July 2010, showing that the downward trend of small-scale businesses has not yet been reversed, the association said on Monday.

 

The index has dropped for eight straight quarters, according to the association. The reading was 90.3 in the second quarter and 92.6 in the first three months.

 

Based on a survey covering about 2,500 SMEs every quarter, readings range from zero to 200. The index shows an improved business climate when it is more than 100, and a worsening climate when the reading is less. 

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