In May the central government introduced 33 measures to boost the economy following the end of lockdowns in a number of cities. The six most important measures according to the South China Morning Post are:
1. Increase tax rebates. The value-added tax rebate program, with an additional CNY142 billion, is being offered to seven more industries – retail, agriculture, food and drink, services, education, health and entertainment. The additional rebates will take the total for 2022 to CNY1.64 trillion.
2. Fast track infrastructure projects. The central government has asked local authorities to front-load infrastructure investment. The Ministry of Finance has allocated CNY3.45 trillion for special-purpose bonds to support investment in infrastructure construction by the end of August. State-owned banks have also been ordered to set up a CNY800 billion line of credit for infrastructure projects. It is estimated that China’s infrastructure spending reached around CNY23 trillion.
3. Boost car purchases. China’s auto sector is seen as a key area for stimulating consumption. Car sales fell by more than 60% in April, with sales in Shanghai reported to have dropped to practically zero due to its lockdown. There will be a phased reduction of the purchase tax on some vehicles by half from the start of June until the end of the year. The total planned reductions will amount to CNY60 billion.
4. Support SMEs. To reduce the difficulty encountered by SMEs in obtaining financing guarantees, the government plans to invest CNY3 billion to support the sector. Financing guarantee agencies will act as third parties to guarantee the loans to the SMEs. The deduction of government procurement prices for SMEs has been increased from 6%-10% to 10%-20%, making it more likely they will be awarded contracts as they can make lower bids.
5. Help foreign-invested enterprises. The Ministry of Commerce (MOFCOM) will set up a dynamic response mechanism to address the concerns of foreign-invested enterprises from the disruptions caused by the coronavirus and to help them solve problems. Logistics will also be improved.
6. Increase unemployment insurance. To encourage firms to retain employees and to ensure job creation, subsidies to companies that do not lay off employees or keep turnover to a minimum have been increased.
