Shanghai’s New Action Plan for Economic Recovery

Due the serious influence of pandemic control measures in Shanghai, it’s fair to say that many companies are now experiencing a tough period. In that regard, on May 21^st, the Shanghai Government issued the “Shanghai Action Plan for Accelerating Economic Recovery and Revitalization” (Hereinafter referred to as “Action Plan”), aiming to stabilize business and recover economic development.

With 50 policies stipulated, the Action Plan can be mainly divided into the following parts: 1) Relieve business entities from difficulties; 2) Promote the resumption of work, production and the market; 3) Support foreign investment and foreign trade; 4) Recover consumption; 5) Take advantage of investment; 6) Strengthen fiscal and financial functions; 7) Ensure the livelihoods of the people; and 8) Maintain city operations and optimize the business environment.

We hereby summarize the following important measures for your convenience and reference:

Stabilize Foreign Investment

The Shanghai government will establish a service mechanism for the resumption of work and production of key foreign-funded enterprises, launch an online service system for major foreign-funded projects, start the application of special funds for the development of regional headquarters of multinational companies in Shanghai in 2022, and further support multinational companies to set up areas in Shanghai headquarters and foreign-funded R&D centers.

Optimization of the Business Environment

In addition, the Shanghai government will continue to carry out large-scale visits and inspections of leading cadres at all levels to “prevent the pandemic, stabilize the economy, and ensure safety”, establish a service mechanism for rapid response and problem-solving relating to corporate demands, and implement a bailout and optimization campaign for market entities.

Reduction of Rent Fees

For small and micro-sized enterprises which are leasing state-owned offices, they can be exempted from 6-months of rent in 2022. If the enterprises lease offices from a sub-landlord, the enterprises still can enjoy the 6-month exemption.

According to the relevant laws and regulations, if the tenant cannot pay the landlord in a timely fashion due to lockdown, the landlord, whether state-owned or not, cannot terminate the leasing contract for such reason. Instead, the tenant may request for some reduction of the rental fee based on the principle of fairness.

Reduction of Operation Costs

Non-resident users of utilities are eligible for up to 10 percent subsidies for water (including sewage treatment), electricity, and natural gas (except for gas used by gas-fired power generation companies). In addition, utilities provided for non-resident users shall not be cut off even if they fail to pay the fees in time during the lockdown period, nor shall they be subject to any penalties. In addition, non-resident users will be exempted from over-quota and progressive water charges in 2022.

Several other utility and fee reduction measures will also be imposed, including:

• A 10 percent decrease of the average tariff of broadband and private lines for small and medium-sized enterprises (SMEs).
• A three-month waiver of unit domestic waste disposal fees.
• A 50 percent reduction of the current standard of administrative fees for special equipment inspection and testing from April to December 2022.
• In the field of bidding, letters of guarantee (insurance) will be fully implemented in lieu of cash to pay deposits for actions such as bidding, contract performance, and project quality. Those who request bids will also be encouraged to waive bid guarantees for MSMEs making bids.

Shanghai is gradually recovering and now is the time for companies to make efforts to reduce their losses and to regain strength. If you want to know more about whether you can enjoy the policies in the Action Plan, don’t hesitate to contact us: info@dandreapartners.com.