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Shanghai’s plan for economic resumption

Shanghai People’s Government published on 28 May the “Notice Printing and Distributing the Action Plan for Accelerating Economic Recovery and Revitalization in Shanghai” with a list of 50 measures and policies aimed to stabilize the economy and the employment, to help market entities in resuming their operations, and to provide relief, subsidies, and financial aids.

These measures, which follow the 21 policies issued by the Shanghai Government on 28 March, mainly target micro, small and medium enterprises, along with companies operating in industries greatly affected by the pandemic, such as the catering, retail, tourism, transportation, exhibition, and others, and can be grouped in four sections:

  1. To provide relief and subsidies to market entities

  2. To facilitate resumption of work, production, and businesses

  3. To stabilize foreign investment, promote international trade and domestic consumption, support investment projects

  4. To support market entities with a focus on funds, land, talent, and business environment.

Market entities can benefit from several policies to provide relief in terms of deferral, exemption and reduction of fees, costs, and taxes. Eligible enterprises operating in catering, retail, tourism, civil aviation, and road, water, and rail transportation, can defer the payment of the social insurance contributions and housing funds, and late payment fees will be waived during this deferred payment period. Other entities, including the micro, small, and medium enterprises in other industries, can defer the social insurance payments according to the national regulations.

The deadline for the company income tax annual settlement of the year 2021 and for the filing of April, May, and June are postponed to 30 June 2022.

In addition, micro and small enterprises and individual and commercial households engaged in the production and business activities can be exempted from rental fees without submitting further documents to prove the impact of the pandemic. Private landlords are encouraged to provide exemption or reduction of the rental fee to their tenants and receive a subsidy equal to 30% of the total rent reduction or exemption, up to a maximum of 3 million yuan, loans at reduced rates, and reduction or exemption of real estate tax and urban land use tax.

The municipality will further accelerate the refund of existing VAT credits to eligible enterprises and refund medium and large-sized enterprises in advance within 30 June 2022.

Employers operating in catering, retail, tourism, transportation, entertainment, accommodation, exhibition, and other industries severely affected by the pandemic that do not lay off employees can obtain a subsidy of 600 yuan for each employee enrolled in the social insurance system, up to maximum 3 million yuan per employer.

To facilitate the resumption of work, production, and businesses, the examination and approval will be cancelled, and the scope of the subsidies provided by local districts for expenses incurred by enterprises for the epidemic prevention and control.

Furtherly, a mutual guarantee mechanism will be established in the Yangtze River Delta region to ensure a solid supply chain and integrate domestic and international logistics and transportation channels.

Special attention will be put into establishing a service mechanism helping key foreign-funded enterprises resume their production and operations, strengthening communication through meetings, round tables, and visits, and supporting multinational groups in setting up regional HQs and R&D centers. Additionally, additional export credit insurance will support foreign trade enterprises at lower costs.

Measures to improve the internal consumption will include incentives to boost the automotive industry, with rebates for the purchase of new vehicles and the phased exemption of vehicle purchase tax, and encourage e-commerce platforms to provide vouchers and discounts to support cultural and tourism industry, and support the construction of integrated warehouses to process and ensure transportation of materials in case of emergencies.

Other measures are to ensure the resumption of projects under construction and strengthen the coordination and approval of new projects, especially in the construction of key infrastructures, integrated circuits, new energy vehicles, and real estate development.

Banks and financial institutions are encouraged to extend the repayment of loans to micro, small, and medium-sized enterprises and renew loans. Banking financial institutions are also encouraged to set up special funds for enterprises in difficulty, issue financial bonds, provide financing support in key areas, and apply preferential interest rates. In addition, guarantee institutions will continue to reduce the guarantee fees for micro, small, and medium enterprises, and the acceptance period of commercial bills will be shortened from one year to six months.

A faster online mechanism will be set up for land sold through public bidding, auction, and listing to guarantee land supply.

State-owned companies and local departments and districts are encouraged to create new jobs, especially college graduates, and recruit community and public health workers and teachers.

Training subsidies will be granted to enterprises and social organizations affected by the epidemic with a 600 yuan – subsidy per person and strengthen employment services and the self-employment and entrepreneurship of college graduates. Enterprises recruiting new graduates from colleges and universities can receive a 7,800 yuan incentive under tax reduction and exemption for each person per year for three years.

Shanghai will optimize the conditions for direct settlement, transfer of residence, and house purchase to facilitate the settlement of talents.

The two-month period lockdown in Shanghai greatly affected enterprises and businesses. The measures and policies promoted by the local government to recover and revive the economy are addressed to market entities in difficulty and help them resume production and work in an orderly manner. The new measures will be effective from 1 June to 31 December 2022 and all the involved departments, such as the Municipal Taxation Bureau, the Municipal Human Resource and Social Security Bureau, and the Municipal Finance Bureau, are expected to issue a detailed plan for implementing the measures.

Send us an email to receive an English translation of the original document with the full text of the 50 policies and measures of the Shanghai Economic Recovery Action Plan.


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