Against the news of China’s record trade surplus of US$1.19 trillion last year, some have warned it is making trade impossible, arguing that the rest of the world has fewer goods they can sell, or are willing to sell, to China. Critics point to China’s competitive edge in producing better and cheaper goods.

For Beijing, this feels less like criticism and more like a subtle compliment. In many ways, it affirms China’s long-term strategy to bolster its global manufacturing.

Supporting technology-driven small and medium-sized enterprises (SMEs) is a vital part of that strategy. Since the policy concept of targeted SME support was introduced in 2011, the authorities have developed a multi-tier framework to identify high-performing companies and direct support to them.

Two tiers are especially consequential: “specialised, refined, distinctive and innovative” companies, and the “little giants” among them. These companies operate in narrow niches through process know-how, quality upgrades and innovation. The little giants are the leaders with the strongest technological capability, market competitiveness and growth potential.

During China’s 14th five-year plan (2021–2025), the number of specialised firms rose from fewer than 40,000 to more than 140,000, while little giants increased from about 5,000 to 17,600.

This ladderlike certification and support framework is closely aligned with China’s industrial priorities. Around 75 per cent of the little giants certified between 2019 and 2022 are involved in the core sectors identified under “Made in China 2025”. These firms also contribute significantly to technology upgrading and innovation. In 2024, little giants recorded an average research and development spending of more than 30 million yuan (US$4.34 million), with an R&D intensity of 7 per cent.