Explainer | How is China helping its smallest businesses survive Omicron coronavirus lockdowns?

Beijing has rolled out tax relief and other beneficial policies such as more favourable loan rates and rent exemptions, rather than cash handouts

Some Omicron-hit regions such as Shanghai and Tianjin are also implementing local support measures, but analysts still expect a big hit to consumption

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Large parts of Shanghai have been locked down, closing shops and keeping most people confined to their homes. Photo: AP

Published: 4:00pm, 9 Apr 2022

Beijing says it has stepped up relief measures for coronavirus-hit businesses, as the highly contagious Omicron variant has spread to 28 of the country’s 31 provincial jurisdictions and authorities stick to their zero-Covid strategy that involves large-scale lockdowns and mass testing.

In addition to a planned 2.5 trillion yuan (US$393 billion) tax cut, authorities have also rolled out a variety of supportive measures, including rent exemption and credit support.

Relief packages announced so far

Premier Li Keqiang announced the 2.5 trillion yuan tax-cut package at the “two sessions” in early March, and it is considerably larger than last year’s 1.1 trillion yuan.

Key points:

Value-added tax (VAT) will continue to be exempted for small taxpayers – those with monthly sales revenue of below 150,000 yuan
Income tax will be halved if annual payment is between 1 million and 3 million yuan
1.5 trillion yuan worth of VAT refunds planned for this year
Local governments will be encouraged to provide preferential power tariffs
Internet platform companies will be encouraged to reduce charges on small businesses that rely on the platforms
Various charges and other administrative fees will also be cut, and that could include money paid to government-backed trade associations, or port-management fees

The State-owned Asset Supervision and Administration Commission also said in March that small businesses and self-employed businesses who rent offices from central-government-owned enterprises will be exempt from rental payments for three months, while those in regions that are at greater risk to the coronavirus will be exempt for six months.