Officials and industry leaders Monday admitted private enterprises in eastern Zhejiang Province faced difficulty under the current macroeconomic situation but noted it was not as serious as media had reported.

"Private firms in our province did suffer a reduction in profit, tight liquidity and a low level of creativity," said Liu Ting, deputy director of the Zhejiang provincial development and reform commission, at a press conference in Beijing.

The province contributed 203 firms in the country's top 500 private enterprises.

Export-oriented industries and small enterprises were facing a "serious situation" because of tighter currency policy, price rises of raw material and changes of tax policies, said Zhejiang Federation of Industry and Commerce Chairman Xu Guanju at the same press conference.

"Driven by a booming economy and a favorable stock market, some enterprises had expanded too fast. This led to tight liquidity when the macroeconomic situation changed," he added.

There were media reports that a large number of small and medium private firms in the province faced financial difficulties and had even shut down.

Guangzhou-based 21st Century Business Herald reported in July that 20 percent of about 300,000 small firms in Wenzhou, one of the province's manufacturing hubs, stopped operation. Hong Kong-based Yazhou Zhoukan (Asia Weekly) also said on Sunday that, in another industrial hub Yiwu, about 5,000 out of its 18,000 factories were facing bankruptcy.

"The situation is not so serious as reported," Xu said. "The provincial GDP growth stood at 11.4 percent in the first half of this year. We all know private firms contribute to at least 70 percent of it."

These difficulties could be "growing pains," Liu said. "The private economy grew very fast in the past few years and now it enters into a period of adjustment."

By the end of June, the number of private firms with an operating revenue of more than 5 million yuan had increased by 5,500 to 51,400 over the same period last year, according to him.

To help small firms through the hard time, the provincial government has promoted microcredit programs, opened township banks and lifted some administrative charges.

(Xinhua News Agency August 12, 2008)