China is rolling out more economic relief policies. Shanghai offered some tax rebates for companies and allowed all manufacturers to resume operations from June as authorities rolled out policies to revitalize an economy impacted by Covid lockdowns.
Shanghai’s Vice Mayor Wu Qing said over the weekend that the authorities will loosen the conditions under which companies are able to resume work this week, and the city’s government laid out a 50-point plan for accelerating the economic recovery. The measures include tax cuts for businesses and subsidies for purchases of electric vehicles, the official Xinhua News Agency said. The financial hub will accelerate approvals for property projects and supply new residential developments, according to a plan issued by the Shanghai municipal government.
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Beginning on Wednesday, Shanghai’s businesses will no longer need to obtain government approval, or get on the government’s priority resumption list, to re-open. Shanghai authorities also announced that they will move to start lifting the city’s lockdown on Wednesday, as well: All exit and entrance restrictions imposed on residential compounds will be lifted; All forms of public transportation will be restored; Private vehicles will be allowed back on roads. The 50 measures aim to relieve financial pain as businesses reopen. They include (Shanghai.gov):
- Postponing social security payments by businesses
- Extending tax payment and loan repayment deadlines
- Reducing rent for small and medium-sized companies
- Subsidizing companies that retain all their employees
- Offering consumption coupons for big-ticket items, including electric vehicles.
So far this year, the central government has already transferred RMB 1.2 trillion to local governments to support tax cuts and other cost-cutting initiatives for businesses. It is clear policymakers want to turn around the economy in time for the Party congress this Fall. Of note: Container line Cosco Shipping is predicting a strong rebound in freight volume and rates after the Shanghai lockdown is lifted.
Other Recent News Out of China
China got some upbeat economic news early this week as its official purchasing managers index for May rose to 49.6 from 47.4 in April. Still, a reading below 50.0 suggests contraction in the sectors.
China’s downturn shows signs of easing but economists are skeptical about a big revival. The slowdown is testing the credibility of official economic data. Link to more via the WSJ.
Chinese Foreign Minister Wang Yi mocked Biden’s wide-ranging economic framework for failing to lower tariffs, in some of the strongest criticism yet of the US’s plan to counter Beijing’s influence in Asia. “The so-called Indo-Pacific Economic Framework recently rolled out by the U.S. claims to build a free, open, and inclusive new order, but how can any economic frame call itself free if it doesn’t lower tariffs?” Wang said during a visit to Fiji, according to a statement.
U.S. Defense Secretary Lloyd Austin and Chinese Defense Minister Wei Fenghe are expected to meet in person for the first time on the sidelines of a Singapore conference in June, a conversation that would take on extra significance because of increased tension over Taiwan, the Wall Street Journal reports. The meeting hasn’t been fixed, though, and plans could change. In a check on Chinese ambitions, Pacific Island nations deferred action on a proposal that would have extended Beijing’s influence to areas including law enforcement and cybersecurity.
China sent 30 warplanes into Taiwan’s Air Defense Identification Zone, a buffer region where intrusions trigger military alerts. Taiwan is used to saber-rattling from its covetous neighbor, but this is the largest incursion since January
