China's top economic planning agency has announced the establishment of a joint venture company that will offer credit guarantees to cash-strapped small and medium-sized enterprises.

The company, with a total investment valued at 5.1 billion yuan (about 803 million U.S. dollars), will be one of the largest credit guarantee companies in China, the National Development and Reform Commission said in a statement on Monday.

Its Chinese investors include the state-run policy bank, the Export-Import Bank of China, and Baosteel Group Corp.

Foreign investors include JPMorgan Chase & Co. and Germany's Siemens AG.

The deal was signed on Friday, the statement said.

Chinese investors also include HNA Capital Holding Co., Ltd, as well as two investment companies based in Zhejiang province and the Inner Mongolia Autonomous Region, which, according to the statement, are excellent representatives of China's small and medium-sized enterprises.

Small and medium-sized enterprises (SMEs) contribute 60 percent of China's industrial output and 80 percent of its employment. However, the cash-strapped small businesses have been hit hard by a liquidity crunch.

Monetary policy tightening, surging prices, rising wages, the appreciation of the yuan and shrinking overseas demand have bitten into the profits of China's SMEs, according to Xinhua reports.

In order to clamp down on soaring inflation, the central bank has raised benchmark interest rates three times this year and hiked the reserve requirement ratio for commercial banks six times. Both actions have increased the strain for small businesses, the report says.

Heavy tax burdens have also added to small firms' woes.

During an inspection tour of east China's city of Wenzhou in early October, Premier Wen Jiabao urged stronger financial support, prioritized access to bank credit and more preferential tax policies for SMEs.

After Wen's visit, the State Council, or China's cabinet, ratified a set of polices to reduce tax burdens and increase loan support for small businesses.

The changes included raising the tax threshold for corporate value-added taxes and sales taxes, halving business income taxes for another four years and forgiving banks' stamp tax on lending contracts with small firms for three years.

The Bank of China, the country's third-largest lender by market value, plans to expand full-year loans to small businesses to above 120 billion yuan, while the Agricultural Bank of China, the fourth-largest lender, has decided to grant no less than 100 billion yuan to small firms this year, Xinhua reports.