Shenzhen's broad package of measures to help its local economy hit by the COVID-19 pandemic had reduced enterprises’ financial burdens by over 50 billion yuan (US$7.4 billion) in the first half (H1) of the year, Dai Jintao, Party chief of the Shenzhen Municipal Finance Bureau, said on a radio program recently.
Of the total, more than 29 billion yuan was handed out directly by the finance department as inclusive subsidies and special funds to the city’s industries and businesses.
Policies on tax concessions and fee cuts are considered major stimuli to relieve market players’ financial pressures and increase businesses’ cash flow.
The city’s tax rebates, as well as tax and fee cuts and deferrals, reached over 76 billion yuan in H1. Micro and small enterprises accounted for 93% of the taxpayers that benefited from refunds of value-added tax credits.
The Shenzhen government has encouraged financial institutions to increase loans to micro, small and medium-sized enterprises (MSMEs).
The compensation ratio of newly added bank loans in the risk compensation capital pool between March and June was increased by 30 percentage points, boosting banks’ confidence in lending to MSMEs. In H1, new loans worth some 180 billion yuan benefited over 60,000 micro, small and medium-sized market entities.
The city had also involved self-employed people in its government-backed financing guarantee and re-guarantee system. It also reduced guarantee expenses by up to 40% and exempted the re-guarantee fees.
The maximum risk sharing ratio of re-guarantee institutions reached up to 60%, while guarantee institutions assumed 20-30% and banks took 10-20% of the risk, which significantly reduced the cost for MSMEs.
“As small and medium-sized enterprises (SMEs) have a crucial role to play in a market economy, the municipal finance bureau will create more opportunities for them to participate in government procurement,” Dai said.
Since this month, the authority has raised the quota reserved for SMEs in government procurement from more than 30% to more than 40%, and optimized the scoring criteria to ensure that small and micro enterprises will have a better chance in winning government contracts.
The finance authority continued to increase funding for areas related to people’s wellbeing, Dai said. In H1, the city’s expenditure in terms of people’s livelihood amounted to 177.6 billion yuan, accounting for nearly 70% of the total fiscal expenditure.