In any economy, large enterprises take "safflower" as the backbone, but these "safflower" need small and medium-sized enterprises as "green leaves" to support. According to the Beijing News on March 27th, the Enterprise Research Institute of the State Council Development Research Center recently released the 2005 China SME Governance Research Report. The report shows that at present, there is a widespread problem of non-compliance in corporate governance in small and medium-sized enterprises and individual enterprises in China. During the Eleventh Five-Year Plan period, the central government will increase the proportion of public finance supporting the development of small and medium-sized enterprises. Small and medium-sized enterprises in developing countries are more important to economic development. A strong economy needs not only large enterprises that can go out, but also successful small and medium-sized enterprises. Not every industry in the economy has economies of scale. Small and medium-sized enterprises are often the mainstay in industries where economies of scale do not exist, such as commerce and service industries. Even in the manufacturing industry where economies of scale are very important, spare parts and related services provided by small and medium-sized enterprises for large enterprises are necessary for the success of large enterprises. Small and medium-sized enterprises also have two advantages that large enterprises do not have: first, small and medium-sized enterprises are mainly labor-intensive technologies and are the main channels for employment. In some developed countries, SMEs account for 70%- 80% of the employed population. Second, SMEs can adapt to changes in demand in a timely manner. Especially for developing countries, SMEs are more important to economic development. In 1970s, the famous book "Small is Beauty" by the British economist Schumacher made a classic exposition on this issue. However, it should be admitted that in any country, the development of small and medium-sized enterprises is much more difficult than that of large enterprises. This is not only because of the difficulties caused by its small scale, but also because government policies tend to support large enterprises. Galbraith, an American economist, put forward the famous "dual-track theory" in 1970s, criticizing the discrimination of government policies against small and medium-sized enterprises, pointing out that this policy caused economic imbalance and aggravated social and economic problems such as uneven income distribution. This criticism has attracted the attention of American political and academic circles, and the government has increased its support for small and medium-sized enterprises. Small and medium-sized enterprises played an important role in the American economic prosperity after 1980s. Government policies should be more inclined to small and medium-sized enterprises. What is the situation of small and medium-sized enterprises in China? According to the report of the State Council Development Research Center, compared with the perfect development system of small and medium-sized enterprises in EU countries, at present, China's small and medium-sized enterprises are facing problems such as financing difficulties, unequal policies, industry access regulations, and more importantly, there are problems such as corporate governance, ineffective restructuring, imperfect governance, imperfect auditing system, and lack of social responsibility. These problems that plague the development of small and medium-sized enterprises are both external and internal. The development of small and medium-sized enterprises should not only rely on their own to overcome internal problems, but also rely on the government to improve the external environment and guide these enterprises to overcome their own internal problems. In this sense, it is of great significance for the central government to increase public financial support for the development of small and medium-sized enterprises during the Eleventh Five-Year Plan period. Compared with large enterprises, small and medium-sized enterprises are obviously in a weak position. Therefore, government policies should be more inclined to small and medium-sized enterprises to solve their practical difficulties. For example, more than 70% of China's export products are produced by small and medium-sized enterprises, but their products are often unfairly treated by anti-dumping abroad. They are small and scattered, not as strong as large enterprises in self-protection, which requires the government to protect them, or support them to establish their own guilds to protect themselves. For another example, small and medium-sized enterprises lack market monopoly ability and are at a disadvantage in competition compared with large enterprises. This requires the government to enact an Anti-Monopoly Law to give them a level playing field. For small and medium-sized enterprises that need to be encouraged in industrial adjustment in some countries, preferential policies such as tax reduction and exemption should also be implemented. Some of our past policies need to be adjusted. The biggest difficulty in the development and innovation of SMEs lies in financing. Many people ignore the role of small and medium-sized enterprises in innovation. We admit that large enterprises are the main body of major innovation, but this does not deny the role of small and medium-sized enterprises in innovation. Moreover, many large enterprises with major innovations have also developed from small and medium-sized enterprises. We need to focus on small and medium-sized enterprises in the seed stage and initial stage of original innovation. They don't have the financing ability themselves and need the financial support of venture capital funds and the government. Under the condition of underdeveloped venture capital funds in China, government financial support is more important. Specific measures such as "SME innovation fund", "SME development special fund" and "SME service department special subsidy fund" newly added by the state will effectively promote SME innovation. According to foreign experience, it is also an effective way to solve the financing difficulties of small and medium-sized enterprises by providing bank loan guarantee for them by the government. According to the report of the State Council Development Research Center, many difficulties of small and medium-sized enterprises still exist. The solution of these difficulties depends on market competition and their own pressure, but the government can also play an important guiding role through various forms of services. It is an effective service and guidance to organize small and medium-sized enterprise bosses to carry out training and learning in Zhejiang Province. In addition, it is of positive significance for the government to provide information to small and medium-sized enterprises in time, organize institutions (including associations) that provide all-round services for small and medium-sized enterprises, and create conditions for communication between small and medium-sized enterprises and large enterprises. These things seem small, but they have the same effect on SMEs. Today, with the deepening of reform, it is also of far-reaching significance to re-recognize the role of small and medium-sized enterprises and tilt towards them in policy.