China’s Latest Regional Measures to Support SMEs during the Coronavirus Outbreak
By Zoey Zhang, Dezan Shira & Associates
In this article, we provide you the most updated information on local measures that have been released in different regions of China.
On February 5, 2020, the Beijing government announced 16 preferential policies to sustain the production and operation of SMEs, including policies on taxation, finance, social security, subsidies, and rent reduction.
The 16 measures are applicable to micro, small, and medium-sized enterprises, including foreign enterprises, that were registered in Beijing and are in line with the Standard for the Classification of SMEs (MIIT Enterprise  No.300).
Here, we sort out the most noteworthy measures as below (the 16 measures in Chinese are available here):
- Allowing deferred tax payment for SMEs in difficulty. SMEs that have difficulty in tax filing and payment due to the coronavirus outbreak can apply for deferred tax payment for up to three months;
- Reducing rent for SMEs. For SMEs that lease the state-owned assets in Beijing, if they resume or stop their production and operation activities in accordance with government requirements or epidemic prevention regulations and they do not lay off employees or have few layoffs, the enterprise can be exempted from rent for February; if the rental is for office use, then February’s rent can be reduced by 50 percent;
- Waiving administrative fees for SMEs. The Beijing government will suspend the collection of some administrative fees from SMEs, including special equipment inspection fee, sewage treatment fee, and road occupation fee;
- Subsidizing research and development (R&D) costs for SMEs. For science and technology small and micro enterprises in Zhongguancun Science Park, a subsidy of up to RMB 200,000 (US$28,700) in R&D costs can be given to each enterprise based on their actual situation of R&D investment;
- Increasing financial support for SMEs. This includes increasing inclusive loans for small and micro enterprises, extending the repayment period of loans for SMEs in difficulties, reducing the financing costs for SMEs by introducing Loan Prime Rate (LPR) pricing benchmarks, expanding direct financing channels for SMEs, among others;
- Refunding unemployment insurance premiums. Insured companies that are found in temporary difficulties due to the coronavirus outbreak and do not lay off employees or minimize the layoffs can get a refund of unemployment insurance premiums;
- Offering social insurance subsidies for SMEs in line with Beijing city’s functional and industrial development direction. As of April end – if the average number of employees in a Beijing enterprise has increased by up to 20 percent (excluding 20 percent) from the previous year – the enterprise can get a one-time subsidy of 30 percent of three months’ social insurance premiums. As of the end of April – if the average number of employees in the enterprise has increased by 20 percent or more compared with the previous year – the enterprise shall be given a one-time subsidy of 50 percent of social insurance premiums of three months; and
- Providing SMEs other subsidies for employee training and purchasing teleworking service products.
The above measures have come into force immediately and should remain in force until the end of 2020, unless an individual policy has clarified an earlier deadline.
In addition to these 16 measures, according to the Beijing Municipal Human Resources and Social Security Bureau (HRSSB), Beijing will temporarily extend the payment period of social insurance premiums payable in January and February to the end of March and may continue to relax the time limit depending on the epidemic situation (see the official announcement here).
On February 3, 2020, Shanghai Municipal HRSSB announced four measures to help enterprises combat challenges arising from the coronavirus outbreak, including:
- Refunding 50 percent of unemployment insurance premiums paid in the previous year to qualified employers with few job cuts;
- Adjusting the starting month of social insurance payment year from April 1 to July 1;
- Extending social insurance payment period for three months after the epidemic is over; and
- Providing training subsidy.
Please see our article here for detailed information.
On February 9, 2020, the city rolled out another 28 measures to support enterprises fight against the novel coronavirus (you may find the English version of the 28 measures here or the original Chinese document here).
Here, we have filtered out some important policies more relevant to foreign enterprises:
- Exempting SMEs that lease state-owned assets for production and operation and that are badly affected by the epidemic from paying rental in February and March, encouraging commercial property owners to waive or reduce rentals for tenants, and allowing commercial property owners to apply for a reduction in property tax or land use tax;
- Lowering lending rates. For SMEs heavily impacted by the epidemic, local banks are required to offer loans with interest rates at least 25 basis points lower than the LPR benchmark;
- Encouraging local banks to adjust the repayment arrangement, extend maturity periods for loans, or renew the loan without repayment for enterprises that use the capital in industries that are heavily hit by the epidemic, including tourism, accommodation and catering, wholesale and retail, transportation, logistics and warehousing, culture and entertainment, convention and exhibition;
- Lowering the employees’ medical insurance premiums contribution rate of enterprises by 0.5 percentage points in 2020;
- Offering key support to high-growth startups specializing in online healthcare, original innovative drugs, medical supplies, and medical devices; and
- For enterprises unable to fulfill international trade contracts due to the epidemic, the Council for the Promotion of International Trade Shanghai is expected to issue a factual proof of force majeure upon request.
The 28 measures are in effect as of the date of issuance and won’t expire until three months after the epidemic is resolved.
On February 6, 2020, Guangdong province released 20 measures to support all enterprises in resuming production and operation (the 20 measures in Chinese available here).
This includes but not limited to the following policies:
- Deferring the payment of social insurance. For enterprises affected by the coronavirus outbreak that cannot pay the pension insurance, medical insurance (including maternity insurance), unemployment insurance, injury insurance, and housing provident fund on time – they are allowed to pay the insurance premiums within three months after the outbreak is resolved;
- Refunding 50 percent of unemployment insurance premiums paid by the enterprise and its employees in the previous year to qualified employers that does not reduce the number of employees;
- Exempting enterprises seriously affected by the epidemic and that lease state-owned assets from paying the first month’s rent, and halving the rent for the second and third months;
- Exempting eligible enterprises from paying property tax and urban land use tax;
- Allowing qualified enterprises to defer filing and paying taxes for no more than three months;
- The wages paid by the enterprise during the period when the employee received medical treatment or was quarantined by medical observation due to the epidemic are subsidized to the enterprise at a rate not exceeding 50 percent of the employee’s basic pension insurance contribution base; and
- If an SME has signed a contract with a state-owned enterprise (SOE) and cannot fulfill its contractual obligations on time due to the epidemic, the term of performance may be extended appropriately.
These policies will be effective for three months after the date of the issuance.
Moreover, to help easing the tax burden on enterprises producing materials for epidemic prevention and control, Guangdong’s provincial tax bureau has released various useful tax policies.
Of course, similar policies have been adopted by other regions as well.
On February 2, Suzhou city government announced ten measures to shore up the confidence of SMEs (see the official announcement here).
On February 4, Shandong province became the first province releasing measures to support SMEs. The 20 measures released cover policies on finance, taxation, social security, and rent reduction (the document in Chinese can be found here).
On the same day, February 4, Chongqing also released 20 measures for SMEs (the document in Chinese available here).
On February 5, Hunan tax bureau released 10 tax measures to support the anti-virus campaign and business affected, including reducing property tax and urban land use tax and deferring tax filing and payment deadline (see the original announcement here).
On February 5, Sichuan province proposed 13 measures to ease financial burdens on SMEs (see the official announcement here).
On February 6, Liaoning province released 25 similar measures to support SMEs (see the official document here).
On February 7, Fujian province announced 24 measures to support enterprises in resuming production and operation (the official link is here).
We’ll continue monitoring the local incentives. If businesses need assistance with applying for these incentives, please contact us at firstname.lastname@example.org.
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