China’s tech hub Shenzhen rolls out incentives to aid economy battered by Covid-19 controls

The government has promised tax credit refunds, cash subsidies, free services and other relief measures to support businesses
Shenzhen, which was put under a citywide lockdown for a week in March, saw only 2 per cent GDP growth in the first quarter

Shenzhen

Iris Dengin Shenzhen

Published: 6:00pm, 7 Jul, 2022

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Shenzhen, China’s southern tech hub, has rolled out a 30-point package, including tax incentives, cash subsidies and consumption stimulus, to aid the local economy hit hard by strict Covid-19 control measures.

The city’s government pledged to refund excess tax credits to businesses affected by the pandemic, including catering, accommodation, culture and other industries. It also promised to waive late payment fees for small and micro businesses that failed to pay electricity and water bills from June to November.

Trucks passing through the city’s checkpoints with Hong Kong would receive free services, while airlines operating out of the Shenzhen Baoan International Airport would receive a cash subsidy of 10 yuan (US$1.49) for each inbound or outbound passenger, authorities said.

Cars park beside Futian Checkpoint, one of the border crossings to Hong Kong, in Shenzhen. Photo: Reuters

The policies come on the heels of another relief package that Shenzhen introduced in May to help its economy, after the city was battered by various Covid-19 restrictions.

To boost consumption, Shenzhen gave out subsidies worth 70 million yuan for consumer electronics and 30 million yuan for home appliances for purchases of smartphones, laptops, drones and a range of other products.

The city of over 17 million, which China has chosen to develop into a model city, has shown growing signs of economic distress, especially in the service and trade sectors.

Shenzhen, which was put under a citywide lockdown for a week in March, saw only 2 per cent GDP growth in the first quarter – well below the national rate of 4.8 per cent in the same period, and the city’s full-year target of 6 per cent.

As part of the government’s scheme to ensure job security, companies that are unable to operate normally due to Covid-19 will receive a 500 yuan subsidy for each employee enrolled in the social security programme. Business owners will also receive a subsidy of 1,500 yuan for each fresh graduate they hire.

The government has pledged to reward internet companies with “healthy growth”, without elaborating on what those rewards are and the criteria for obtaining them. However, the government has specifically pledged to subsidise e-commerce live-streamers and related service providers.

For the retail sector, Shenzhen has promised to provide up to 1 million yuan to any new “flagship” stores in town.

02:01

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Nationally, China has also introduced various measures to boost its flagging economy.

In May, Premier Li Keqiang announced a 33-point package of policy items to stabilise the nation’s economy and support businesses struggling under extended lockdowns across the country.

Despite the challenges, China is determined to press on with its “dynamic zero” Covid-19 policy.

On Thursday, Shenzhen put several residential areas in Futian and Nanshan districts, the city’s financial and tech centres, under lockdown following reports of one infection and one asymptomatic case.

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